Message Font: Serif | Sans-Serif
 
No. of Recommendations: 2
Not necessarily. Government contracts (and I refer to those contracts let by Dept of Defence agencies) areof several types, i.e. firm fixed price with a negotiated profit, cost plus fixed fee where the fee can vary depending on performance, fixed price incentive where the profit can vary again based on performance.
Also long term contracts can (and very often are) for a shorter period where funding is available, and the out years of the contract are in the form of options and future need. Sometimes these outyear options are never awarded. But the real problem is how the company performs. What is the cost to the company? In the event of overruns, generally that is at the expense of profit. And it has not been unknown for some of these contracts to cost the company more than the actual value of the contract.
A long term contract is not necessarily long term, nor is it a guarantee of a profit.
In my view.
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.