From https://history.army.mil/books/Studies/sunell/sunell.htm, thought it was relevant to the current conversation.
General Sunell: Well, General [Robert J.] Baer was the tank program manager for a long time, and he had a very close relationship with Fort Knox. The reason I can discuss the tank program is because I left the Armored Reconnaissance Scout Vehicle (ARSV) task force and became the deputy program manager for the XM1 tank where I worked for General Baer.
General Baer, in effect, said, "This is what all these different items cost on a tank, and I have a $507,000 ceiling for the XM1 tank." And he said, "If you really want to add that to the tank, here's what a fender costs; here's what a machine gun costs. Now which one do you want me to take off, because I cannot exceed this cost ceiling?" Everybody understood that.
General Starry and General Baer traveled together and then General McEnery came in. He did the same thing; he kept the program going. There was some criticism of the tank, and General Lynch came out very strongly as the commandant supporting the tank. His famous message was, "If you can't support the tank, keep your mouth shut and at least don't join the hostiles," if I recall his words.
The tank went through then. General [Donald M.] Babers became the program manager, and we always kept an extremely close relationship with Fort Knox. The program manager and the commandant were not enemies; they worked together. That kept that program going.
Major Pirnie: In other words, there were two aspects. One was the close cooperation with the Program Management Office [PMO] in Fort Knox, which included personal contact with the officers involved, extending over several changes in personnel. The second aspect was tying it to a budget requirement.
General Sunell: Yes.
Major Pirnie: It's perhaps a little unfortunate we have to use the budget in that fashion, but it does compel decisions. Wouldn't it be better if we worked with effectiveness criteria?
General Sunell: Well, this went back to the MBT70 [Main Battle Tank-70] when we had a joint program with the Germans. That tank was coming along, but we had so many additional dollars tacked on to it that Congress accused the Army of "gold plating," and the program was stopped. Everybody knew we needed a new tank program. The Congress specifically stated that the Army could have a tank program, but it must be below a specific cost ceiling. Every time we went to testify in Congress, we were required to go back to that number ... that basic number.
Even today, Brig. Gen. Peter M. McVey, who used to be the program manager for tank systems and is now responsible for all combat vehicles, must go back and trace the cost to the 1972 dollars�$507,000 a copy.
Major Pirnie: How wise was it for Congress to set that standard? Did that help or hurt the program?
General Sunell: It certainly didn't hurt the program at the time. We stayed under budget, and we had the support of the Congress. We didn't have runaway costs. It allowed the program manager to budget within those dollar figures. But in one place it did hurt the program. We knew at that time that we wanted an underarmor auxiliary power unit that cost $35,000 in today's dollars, probably about $15,000 in dollars in that day, but we couldn't do it. We included the power unit as a Pre-Planned Product Improvement program. But if we could have taken the dollars and put it in then, in the 1970s, it would have cost us half as much as to go back and add it to the program.
The second thing we always wanted and needed was a redundant sight for the commander. By that I mean an independent sight for the commander, now called the Commander's Independent Thermal Viewer (CITV). This allows the commander of the tank to search a portion of the battlefield and the gunner to look at a different portion of the battlefield. If the commander sees a target out there, he hits a switch and the gunner automatically slews to that target. We wanted that capability, but we couldn't do it because we couldn't exceed that ceiling.
Now the commander and the gunner are looking through the same sights, and we really would have liked to have had the commander's independent sight, but we couldn't do that. We saved dollars at that time, but it's going to cost us big bucks to go back and do that now.
Major Pirnie: In other words, setting the ceiling had the ironic result of increasing the cost of the vehicle.
General Sunell: Yes. It increases the cost of the vehicle when you have a pre-planned product improvement.