| Summary: | The largest program in the Navy budget is procurement and one of the
largest appropriations within this program is aircraft procurement . Because
it does represent such a substantial portion of the budget, aircraft procurement
is potentially one of the most important areas for improving cost
effectiveness in the Navy. One important available instrument for increasing
this cost effectiveness, by increasing efficiency in aircraft procurement,
is the incentive type contract. The value of the incentive type contract
lies in its ability to compensate for the lack of economic market conditions
associated with aircraft procurement. The Navy's use of incentive contracts since 1951 and the resultant
opinions and actions of the Navy, government legislative agencies, and the
aircraft industry are presented. These actions and opinions are discussed
and recommendations for more effective employment of contractual incentives
are offered.
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