Lockheed's new Pentagon deal makes a bad bargain worse

In a recent earnings call Lockheed Martin described what may prove to be a highly consequential shift in Pentagon contracting. CEO Jim Taiclet outlined a new “commercial-like” arrangement with the Department of Defense under which Lockheed would receive compensation even if the government altered procurement plans or reduced anticipated production quantities. Presented as a mechanism for stabilizing supply chains and accelerating weapons production, the arrangement effectively transfers addition...