It's much more likely that this stuff is difficult to do, and thus difficult to price out, than that somehow the managers of these companies are working with the finance people to secretly steal money from the government and hide it in their books, the government never catches it, and these very amicable ties between the government and defense contractors continues - and all of that is before we even get to what happens when you try to steal and your project falls behind.

It's way more valuable, usually, to get it done quickly and done well the first time, so you can move onto another project. You leave a few people on the original program pull in tons of super easy maintenance contract money for what essentially ends up being a skeleton crew.

Or, I suppose, you could try and inflate costs by a couple percentage points (not too much - you'll get caught and the risk here is MASSIVE), keep working on the same program, and hope the opportunity cost doesn't get too high.

I'm sure it happens, but I doubt it happens often.

I mean there's almost certainly crime that happens in contracting but there is a real risk of being caught if you commit fraud. Do remember that companies such as Google do pay out literally millions of dollars to random people that send in invoices for work never requested or done.

Cost+ at face-value isn't that bad of an idea. An alternative to it is the government hiring a bunch of people to do a project and ideally the government only pays Cost in that case. For people that don't believe the government can do anything this is a pretty good trade off.

IIRC, the `+` part is capped at 15% profit so IIUC that's similar to an operating margin of 15%. Although IIUC, executive expenses and a ton of other things come out of the `+` part so it should be lower than 15%. But the point I'm going to make here is that an operating margin of 15% isn't really impressive and that's the best that the contractor can do.