C-17 Issues and Concerns

Discusses the early years of the C-17 program and highlights how mixing the development and production efforts on the same contract and using an event-based clause contributed to problems the program experienced. The paper discusses the rationale why the program included both development and production work on the same contract; why the contractor changed its accounting methods and transferred previously paid engineering charges from the development effort to the production efforts; and why the government initially approved this action and then subsequently reversed most of the transferred charges. Also discussed is a progress payment made by the government on the production effort of the initial contract even though the government was aware the contractor was significantly overrunning the development portion of the contract. Further, the paper discusses problems both the contractor and the government had meeting the requirements of the event-based clause in the contract. Finally, lessons learned are developed based on the problems discussed. The paper does not support or defend any specific position but attempts to provide background information so the reader can better understand the environment in which the decisions were made.