I read recently on a PPRuNe thread, I can't remember which, that companies routinely put their prices up by 200-300% on MOD contracts.
Come on, you really shouldn't believe everything you read on Pprune!
Especially if it comes from the usual cast of industry bashers.
Many of whom appear to know F all about the subject.
On the major programmes in which I was involved, the contracts allowed us a specified maximum percentage profit, the MOD audited our books and any excess profit would be recovered. How many other industries have their costs analysed by their customers who can then refuse to pay ?
The large cost overruns were invariably caused by MOD either changing the requirement part way through the development, or by pushing programmes out to the right to 'save money' On one major contract PE decided to zero fund the contract for 12 months as a savings measure, with no guarantee that funding would be in place in a year's time resulting in all work stopping both in industry and the research establishments (in the days we had any). The company obviously wasnt going to pay for a team of 100 expensive development engineers to sit on their hands for a year so the team was disbanded and many went off to more highly paid jobs in the telecoms and IT industries, never to return to Defence. When MOD suddenly decided after 18 months to turn the project back on again, the company said OK, but it will take us at least 6 months to build up and retrain a new team. The end result was a 24 month slippage and a new development team which was less qualified and less experienced than the original, and a programme that ended up the subject of a parliamentary enquiry.
Having worked in Trials and Evaluation, Operational Requirements, Procurement, and Industry I would say they all have their shortcomings, but if you want to see where the problem lies, look within the greater MOD empire.