Sharing Savings and Risk, Special Contracts Appeal to Cash-Strapped Agenc

[Burma Jones]

This is a bit "inside the Beltway" but has some disturbing points.

A problem is that only Big firms can do these contracts. Also, there's a real possibility for corruption here as firms tie up huge amounts of cash based on evaluations whose metrics can be altered. I believe that this is another avenue of big time corporate governance of the US.



http://www.washingtonpost.com/wp-dyn/articles/A44259-2004Feb15.html


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The Bush administration is encouraging cash-strapped government agencies to fund expensive technology upgrades essentially by handing out IOUs: Consulting companies agree to build computer systems now, and the agencies promise to pay later with the money they save by using modern systems. If an agency does not save any money, it does not pay. It is a good deal for government and a risky, but potentially lucrative, bet for technology companies.

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But will industry sign on? Only the biggest government contractors have enough cash to tie up their own money in lengthy projects. So the growth of these contracts depends on the judgment of sprawling technology consulting firms, including Accenture or BearingPoint Inc., and giant contractors, such as Lockheed Martin Corp.

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