Contractors get awards for 'average' work
WASHINGTON, April 16 (UPI) -- A U.S. government study has found incentive payments are routine in some major weapons contracts, even if projects are over-budget or not on schedule.
The payments, known as award fees, are intended to motivate defense contractors to perform to high standards, but a Government Accountability Office study concluded the fees are paid almost as a matter of course, The Washington Post reported.
The newspaper cited a case involving the Boeing Co.-Sikorsky Aircraft Corp. partnership, which was developing the Comanche, a helicopter that was supposed to evade radar. In February 2004, the Army announced it was canceling the project, which was nearly three years behind schedule and more than $3.5 billion over budget.
Nevertheless, an Army panel a few weeks later granted the Boeing-Sikorsky partnership a $33.9 million "award fee" -- part of more than $200 million in such fees paid to the partnership over four years.
Such practices "undermine the effectiveness of fees as a motivational tool and marginalize their use in holding contractors accountable," the GAO concluded -- adding that defense contractors receive award fees for work that is simply "acceptable, average, expected, good, or satisfactory."
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