As the Federal Government's budget crisis continues to unfold, many people are starting to believe that there will be a "war on profits". The government has always wanted a good deal from government contractors and that includes defining a certain limit on the amount of "fee" or profit that they are willing to pay. This is especially true on cost reimbursable type contracts. Of course, many government contractors are looking for excuses on why they are loosing some business from their biggest customer. While the government is trying to reduce waste and trim budgets, they claim that they are not trying to force contractors to take unreasonably low profits or no profits. The Pentagon has assured contractors that they are not trying to eliminate profits or restrict them. They are trying to eliminate cases where any contractor may be taking advantage of the government. This becomes a delicate line to walk. Many times in the past the lower than normal profits on government contracts could be rationalized as a cost of doing business in exchange for a large customer that always paid their bills and always paid on time (as long as you followed the procedure). You didn't have to worry about a "bad debt expense" with this customer. But there were a small percentage of firms that took advantage of the government. This abuse caused headaches for all government contractors as more rules and regulations are constantly added to help prevent the abuse of "the system".
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