Variables influencing the performance of defense R&D contractors

Several variables affect the performance of contractors on defense research and development (R&D) contracts. These variables can be classified as endogenous or exogenous. Endogenous variables are influenced by the project manager and the contracting officer, while exogenous variables are not. The effects of four endogenous variables on contractor performance are examined. These variables are: type of R&D, type of solicitation, type of contract, and size of business of the contractor. Surveys were conducted in 1978 and 1986 on completed R&D contracts. The measurement factors used were technical performance, schedule, quality of reports/products, cost, and overall assessment. A two-way analysis of variance was used to examine how the endogenous variables influenced the contractor performance. The authors conclude that, except for size of business, all variables had an effect on some of the performance factors. The recommendations include a proposed new contracting approach for major development contracts. This approach is based upon life-cycle cost minimization, and it favors the use of cost contracts over fixed price in the later stages of development