Rethinking contract design: Why incorporating non-legal drivers of contractual behavior in contracts may lead to better results in complex defense systems procurement

Abstract

Defense acquisition programs are plagued by surging delays and cost overruns. In particular, contract management of defense acquisition programs has been identified as 'high risk' - and threatening to project results. This article examines how contracts, as legal mechanisms, may be disruptive and obstruct cooperation between the DoD and contractors. The main observation this article makes is that tensions between the norms set forth in contracts and other non-legal norms can become a major reason for problems in defense procurement. It explains why these tensions may undermine cooperative behavior between contractors and the DoD and can become a source of disappointing acquisition program results. A framework is provided for identifying such tensions, and contract design principles are proposed to enhance cooperation and eliminate these tensions when drafting contracts for defense acquisition and other complex programs.