Don't Rush to Restrict the Use of Car Phones : Defense Profits Reasonable

The article "Pentagon Study on Defense Firm Profits Faces Congress' Scrutiny" (Aug. 8) is another example of the media's continuing negativism toward the defense industry. Why didn't the headline read "Pentagon Study Finds Defense Firm Profits Reasonable"?

Sen. William Proxmire's comment regarding "guaranteed" government contracts is misleading. Government contractors all bear the risk that sufficient money will not be appropriated for the program on which they are working. Further, all government contracts provide that the government can cancel the contract at any time for the government's "convenience." Such a provision is unheard of in commercial contracts.

Regarding competition, "negotiated" contracts are not the same as contracts awarded without competition. Negotiated contracts are used for complex purchases where the government is interested in the bidders' technical approaches as well as in price. Finally, if the Pentagon study did indeed find that the average profits for non-competitive government contracts are reasonable, then the average profits for all government contracts must be even more reasonable (i.e., lower).


Hermosa Beach

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