Cost plus isn't used just at NASA. It's even more evil in other arenas, like electricity in California. Our regulators allow for a fixed profit margin for opex and a higher fixed profit margin for capex. This has the twin effects of running things to failure (and igniting the state) in order to avoid opex and instead claim capex, and also motivating as-high-as-possible costs for everything. No competitive bids are possible.
The same madness happens here in Australia too. Just recently I did an IT project for a local electric utility company and they were blowing $200K on firewalls for a system used by 10 people. Similarly they “upgraded” a perfectly good 10 Gbps fixed line to 200 Gbps for the same group of users. They can utilise maybe 1 Gbps on a busy day.
They also get a fixed profit ratio relative to capex. So they burn giant piles of money to get their percentage from the government…
Electric companies tend to be regulated monopolies, and suffer from the same perverse incentives with models like being allowed a 10% profit. The more they spend replacing poles and building new pole lines, the bigger the profit the regulations allow.
