- You must set fixed prices/budgets for these things, otherwise bidders just set the expectations low, then just charge the taxpayers for "cost overruns"
- Similar to above, the intense competition leads bidders to put forward highly accelerated processes, which almost always causes the programs to fall behind schedule, especially when it's dealing with a completely new ac/ship, even when the contract does have some penalties, sorta similar to what we see in the airliner industry these days.
- What's good for the commercial industry does not always/usually fit military applications.
Here's part of the article:
With the crack of a Champagne bottle against its bow, the newly minted Navy warship, bedecked with bunting, slid sideways into the Menominee River in Wisconsin with a titanic splash.
Moments before the launching on Sept. 23, 2006, Adm. Mike Mullen, the chief of naval operations, told the festive crowd of shipbuilders, politicians and Navy brass assembled at the Marinette Marine shipyard, “Just a little more than three years ago, she was just an idea; now Freedom stands before us.”
Not quite. The ship — the first of a new class of versatile, high-speed combat vessels designed to operate in coastal waters — was indeed bobbing in the river, just four months after the promised launching date. But it was far from finished. In fact, the ship floats there still, work continuing day and night.
A project heralded as the dawning of an innovative, low-cost era in Navy shipbuilding has turned into a case study of how not to build a combat ship. The bill for the ship, being built by Lockheed Martin, has soared to $531 million, more than double the original, and by some calculations could be $100 million more. With an alternate General Dynamics prototype similarly struggling at an Alabama shipyard, the Navy last year temporarily suspended the entire program.