The Price of Air Power: Technological Change, Industrial Policy, and Military Aircraft Contracts in the Era of British Rearmament, 1935–39

During the Second World War leading belligerents such as Britain, the United States, and Germany, favored the use of fixed-price contracts for purchasing military aircraft. These contracts were believed to encourage economical and efficient production. Yet only Britain succeeded in developing contractual procedures based primarily upon the fixed price. This article examines the evolution of British contractual policy in the later 1930s, drawing upon both corporate and official records to explain why Britain succeeded where both America and Germany failed. Efforts to develop the fixed-price system in Britain were initially frustrated by the technological revolution which transformed aviation during the 1930s. Moreover, divided opinions within both the government and the aircraft industry helped prevent the emergence of a coherent contractual policy. By 1939, however, British aircraft manufacturers were unanimous in their support for fixed-price contracts.