Originally Posted by
Sun Who
Yes.
however, what happens in reality when you contract like that, is the company in question runs the service/equipment for a year or so, and then says "Oh, it appears to be more expensive than we anticipated, give us more cash or we fail." We can't afford to fail, so we give them more cash.
There is no way to transfer risk when your business is defence or security.
Sun.
Sun - you are right about the contract risk but I'm not so sure about the Treasury rules. Up-front payments are generally discouraged and repayments are supposed to be matched with accrued value. That doesn't mean to say, of course, that poor decisions haven't been made in the past by those with their own agenda or little commercial knowledge. It would be interesting to see if the fiscal controls have got any tighter.