Stop Being Okay With Patience, Ctd

Got a great comment this morning: "Your post was awesome and eye opening. I agreed with it completely but your recommendation for the penalty was maybe too harsh. I think the risk vs reward ratio would be too high for companies because you'd essentially bankrupt them if they failed at a large project."
Of course, I'm not the ultimate authority on the ideal way to structure effective government-funded R&D. The specifics of my proposal should be ignored in content but not in principal: the lack of punishment for failure decouples the worry an innovator might normally have about his/her success.
Think about it: let's say the government funded a project to create a new super-awesome Humvee. In a worst case scenario currently, the company that won the contract would have their funding cut off early because they failed to meet mid-program deliverables. In the best case scenario they finish the program with a new SuperHumvee they can sell in quantity. But once again, there is no "punishment" beyond having your paychecks cut off if the company fails to meet deadlines.

This seems comical if you look at it from the outside. The government wants something, a company proposes to give it to them, the government pays that company money, and then the company isn't really legally/financially penalized if they don't deliver the government anything. And then the company asks for more money. Honestly it seems incredibly unethical. But its normal!

Maybe the commenter is right: a 364% penalty for failure might be too high. But what about a 25% penalty? If a company wins a contract they either fulfill it to the letter or they pay back all the money plus a quarter of the contract value. That $75 million DARPA contract either gets fullfilled or you pay DARPA $94 million back with a letter of apology and the publicized humiliation of being a failure.

I really don't think this would endanger government-funded R&D. People will always bid on projects. But right now there is this plague in the system where industry seems intent on winning follow-on work, which basically requires a project to not be complete. It's like there is an unspoken goal, both on the contractor side as well as the government side that "follow-on work" will occur if the project goes well. This simply shouldn't be the case.

This is what I mean by "stop being okay with patience." The Government needs to lose its patience with contractor cheekiness. And the American taxpayer needs to lose patience with government projects that sound glamorous but never yield anything but perpetual industrial stimulus.


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