The criticism of cost-plus contracting centers on who bears the consequences when a supplier underestimates a project. If the government absorbs the additional expense, a company's poor bid becomes the customer's problem. That weakens the financial consequence of getting the original estimate wrong. Boeing's Starliner is briefly considered as an example and then set aside because its contract basis is uncertain, so it does not establish the argument.
Notable Point · 2:11:07-2:12:08
How cost-plus contracts can shift underbidding risk
When additional costs fall on the government, an underestimated bid can transfer the supplier's mistake to the customer.