NASA Procurement

Approach to Sharing Risk Under Certain Research and Development Contracts Is Starting to Change Gao ID: T-NSIAD-92-12 March 18, 1992

In procuring research and development, NASA has typically accepted all of the cost risk by using cost reimbursement contracts without any cost-sharing provisions. Recently, however, NASA headquarters procurement officials have advocated shifting some risk to contractors in two proposed multiple-unit contracts in which a production phase can be reasonably defined. This testimony addresses the following points: (1) how NASA allocates risk for research and development contracts, (2) how the Defense Department uses warranties, (3) how NASA uses the inspection and correction of defect warranty in its research and development contracts and its cost, and (4) the availability of insurance to cover contractors' materials and quality defects. GAO also notes several ways to shift more risk to contractors without changing laws or regulations.



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