john@hp-pcd.UUCP (john) (07/19/85)
<<<< With the recent flap over Grumman charging $659 for ashtrays, the Naval Air Rework Facility at San Diego did an estimate to find out how much it would cost to build them in their facility. Their cost was $1288.81. Grumman was probably losing money on that deal. There is a good editorial on the subject of defense department "overcharges" in the July 15 issue of Aviation Week & Space Technology. Those wishing more information than available on the 6 O'Clock news may wish to read this. Anyone who thinks that an empty glass jar would make a good ashtray on an airplane should not be allowed to fly unless accompanied by an adult. John Eaton !hplabs!hp-pcd!john
lauren@vortex.UUCP (Lauren Weinstein) (07/23/85)
That's a red herring (claiming that they would have cost over $1200 to build directly). That second cost estimate was based on having them made one at a time, by hand, by someone in the local machineshop, and only points out the wasteful labor cost practices in THAT SHOP. I saw what that ashtray looks like. Any high school metalshop student could throw one together for about $30 in parts, tops. Add some reasonable markup and labor, and you still end up one damn sight less than $1200+. If the DoD had put stuff like that out for open bids (as they supposedly are starting to do now in more cases), we'd have seen a damn sight less of that sort of gouging. Some smart little company would find a way to build them, complete with labor, for $150 or so. Even that might be a bit high. Face it. The defense contractors have been charging all that the market can bear, viewing the DoD budget as a bottomless pit into which they could throw invoices for everything and anything. It's about time they learn that their gouging will no longer be tolerated. Companies that gouge like that on defense-related products are the nadir of business, and should have their directors hung up by their thumbs for a few years--ideally in federal prisons where appropriate. People that gouge, gouge, gouge while waving the flag and proclaiming their great patriotic spirit are just about the lowest form of life. --Lauren--
chris@leadsv.UUCP (Chris Salander) (07/25/85)
In article <717@vortex.UUCP>, lauren@vortex.UUCP (Lauren Weinstein) writes: > > Face it. The defense contractors have been charging all that the market > can bear, viewing the DoD budget as a bottomless pit into which they > could throw invoices for everything and anything. > Before you get too worked up, you should know the cost breakdown of the $1288 ashtray, or the cost of any other outrageously priced part. You will find that the Dept. of Defense is itself responsible for most of the cost. The paperwork for every part passes through at least FOUR agencies or departments WITHIN DOD. Each group makes estimates of costs, and puts that down. They then add an overhead charge to pay themselves for having done the paperwork. They include a percentage of the total cost and/or the cost to them in material and labor. So one agency will add a $50 charge for processing the paper for a $2 part IF THAT PART IS ORDERED IN A SINGLE ORDER. The last agency is charging a percentage of a percentage of a .... Our prices are easily doubled or tripled after going through this DoD maze, and small items can have their prices increased tenfold. Further, in the case of webbing to hold a pilot's feet down in an ejection seat: There is a left webbing and a right webbing. One got sidetracked as it worked its way through DoD and passed through TWO MORE bureaus than its twin. It ended up costing 30% more than the other. Most of the blame lies with the DoD. They have NO incentive to perform well and efficiently. Many defense contractors, however, have to also sell to foreign governments, other agencies, and sell commercial versions of military products. To accomplish this, the total product must be cost effective for all customers, whether they are paying attention or not. Consider also that high costs are sometime deliberate, to discourage changes after the product is finished and the contract completed. People who have worked on that product have gone on to other things and it is very expensive to respond. Conclusion: Abolish the civil service system.
lauren@vortex.UUCP (Lauren Weinstein) (07/27/85)
Ah! Some contractors may kick and scream--but it makes no difference-- a rose by any other name... Yes, paperwork adds to costs. Yes, many items are overspecified. That's still no excuse for the sorts of things we're seeing. A spec that says an ashtray must withstand 2.5 G means you build it from metal, not out of kleenex. And let's look at the more frequent, and probably even more costly, cases. How about the one for the little plastic feet on the bottom of office stools? I seriously doubt that there was a separate spec for that--nor that it was involved in much separate paperwork. But when one of those little 25 cent suckers split, the replacement part cost was something like $150 from the stool manufacturer, apparently. Nothing like cost effectiveness. I won't even bother to bring up the many charges that have started showing up for such "defense" items as company parties, promotional models and giveaways, dog kennels, vacation trips, etc. C'mon. We know that the way some government purchasing is done has some problems. But just because someone occasionally acts in a non-optimal manner is still no excuse to steal his wallet. Some contractors seem to have forgotten this, and they try to fleece the government (and thusly us) for all they think they can get away with. --Lauren--
jeff@wjvax.UUCP (Jeff Albom) (07/30/85)
> > >Ah! Some contractors may kick and scream--but it makes no difference-- >a rose by any other name... > >Yes, paperwork adds to costs. >Yes, many items are overspecified. > >That's still no excuse for the sorts of things we're seeing. A spec >that says an ashtray must withstand 2.5 G means you build it from >metal, not out of kleenex. And let's look at the more frequent, and >probably even more costly, cases. How about the one for the little >plastic feet on the bottom of office stools? I seriously doubt >that there was a separate spec for that--nor that it was involved >in much separate paperwork. But when one of those little 25 cent >suckers split, the replacement part cost was something like $150 from the >stool manufacturer, apparently. Nothing like cost effectiveness. ... >--Lauren-- This article was obviously intended for net.flame. I would suggest that if you do not understand or comprehend the full extent of military procurement regulations and MIL level documentation requirements, then you should not make misleading accusations as above. Most military equipment have drawing requirements of a totally unbeleivable nature. If you have never attempted to document to DOD-D-1000 level 3 requirements, then you can never understand the costs that are incurred. Do you understand the basics of business such as overhead, flat line loading, etc. True that prices are incredibly out of line for a lot of what the government buys, but perhaps 90% or more of that price (especially for normally inexpensive items) is due to government requirements. And that's before you get to procurement snafus. Change a number or 2 in the line items ordered and you just bought harbor mines instead of a wrench socket. jeff@wjvax
horton@fortune.UUCP (Randy Horton) (07/31/85)
There cannot be enough attention drawn to the venal practices of some defense
contractors who grossly overcharge the government. Mr. Weinstein is
right on the point with his comments. Due to the nature of global politics
at this time, we must maintain a strong defense. Lets try to do it without
spending any more than we have to.
--
+---------------------------------------------+
| allegra\ Randy Horton @ Fortune Systems |
| cbosgd \ |
| dual >!fortune!ranhome!randy |
| ihnp4 / |
| nsc / Clever disclaimer goes here |
+---------------------------------------------+root@vortex.UUCP (The Superuser) (08/02/85)
I am most definitely aware of how government purchasing is done. And I can certainly understand how out-of-line costs are more likely to occur with heavily spec'd military hardware. But many of these overruns are on things like office stools and other equipment that isn't even for military use--just plain old office equipment that wasn't heavily spec'd. What has happened is pretty clear. The current purchasing system has created an environment that makes it easy for "legit" overruns to occur and also easy for contractors to take advantage of the situation and start piling on lots of "non-legit" costs as well. When the government puts out a long spec on a screwdriver, does the supplier say, "Sure, we'll build you a special screwdriver for that--$200" -- or do they say, "Our regular screwdriver like we buy for our non-DoD work will meet that spec just fine--$2." There's a question of honesty. I think many contractors take the P.T. Barnum view--"There's a sucker born every minute." They seem to figure that if the purchaser is so silly that they don't realize they're being fleeced, the seller doesn't have any responsibility to point out the problem, or the cheaper places simple parts and tools could be bought. Apparently some contractors feel that a complex government spec is an easy excuse for throwing all ethics out the window. And we won't dwell on some of the even worse abuses charged to government contracts like office parties--they're a drop in the bucket compared with the screwdrivers, ashtrays, and stool feet. --Lauren--
greg@ncr-sd.UUCP (Greg Noel) (08/02/85)
In article <724@vortex.UUCP> lauren@vortex.UUCP (Lauren Weinstein) writes: >...... But just because someone occasionally >acts in a non-optimal manner is still no excuse to steal >his wallet. Some contractors seem to have forgotten this, >and they try to fleece the government (and thusly us) for all they >think they can get away with. I beg to differ on this, Lauren. I speak as an expert, since I had to fight this system from the other side. It took me a long time to find this out, but, despite the public image, the function of the Government procurement process is \not/ to get the cheapest product, or even to get the most cost-effective product. \Nothing/ in the processing is done to get a better price or even to see if the price is reasonable. The only thing that it does is to make sure that the Govenment is \not/ \cheated/. Now, given the $1288 for an ashtray, that may sound like a strange statement, but 'tis true, 'tis true. The ashtray probably cost three dollars, but the supporting documentation that had to be provided by the contractor (an allowable expense) to demonstrate beyond any doubt that all of the costs were allowable probably cost $1285. Then, on top of that, the procurement branch gets to add in their costs, so the total cost to the using agency is probably even more that $1288. >...... How about the one for the little >plastic feet on the bottom of office stools? .... >But when one of those little 25 cent >suckers split, the replacement part cost was something like $150 from the >stool manufacturer, apparently. Nothing like cost effectiveness. I lost an outstanding engineer over this nonsense. We once needed a part that was readily available at Radio Shack for $3.95. But I wasn't permitted to just send him down to get the part and have him submit a voucher to petty cash. I could go on for paragraphs about what we had to go through to get that part -- specification, publishing, bids, evaluations, and so forth -- but the final cost that came out of my funds was over two hundred and twenty dollars. And that doesn't even include the labor costs of my engineer and myself. But I had a shelf-foot of paperwork that \proved/ that the Government hadn't been cheated..... The engineer quit in disgust. I didn't blame him. -- -- Greg Noel, NCR Rancho Bernardo Greg@ncr-sd.UUCP or Greg@nosc.ARPA
lauren@vortex.UUCP (Lauren Weinstein) (08/03/85)
Hmmm. If the contractors are all so squeaky honest, why are we now seeing them offering refunds, money-back guarantees (that's a first, apparently) for overcharging, and refunds left and right? I think it's still very clear that many contractors took a tempting situation, with high costs built in, and added on whatever extra margin they could for themselves. Maybe they figured that since the prices were already 3X higher than they should be, nobody would notice if they made them 6X higher. Once again, the refunds and specific line items brought out (especially for standard parts without special specs) have resulted in admissions of guilt on the part of several major contractors. One can only assume we're seeing only what was able to be dragged up. Oh yes, I'm still waiting to hear about how these honest contractors, who wouldn't dream of cheating the government, felt it was OK to charge their office parties, company-enhancing give-aways, pet supplies, and other unrelated costs to specific military contracts, when such "overhead" charging was specifically forbidden. A drop in the bucket compared with the other overcharging, of course. But it gives a window on their overall attitude of "what they thought they could get away with"... --Lauren--
john@anasazi.UUCP (John Moore) (08/06/85)
>to occur with heavily spec'd military hardware. But many of these >overruns are on things like office stools and other equipment that >isn't even for military use--just plain old office equipment that >wasn't heavily spec'd. > I once worked on a Navy contract to design new shipboard office equipment. The specs were truly unbelievable and unreasonable. It was not "just plain old office equipment" - it was desks that had to withstand a 20mm hit, etc. There was no reason that the Navy couldn't go out and just buy ordinary office furniture, but rather than do that, they had miles of specs that were unrelated to what was needed, but had to be met. Example: The foam padding on the arm of some chair (chair, office, ordinary (??)) had to be of a specified type of foam (which was not particularly desirable, but had been used for umpteen years). The padding had to be .1325 +- .05 inches thick (or some similar spec). By the way, with the intercession of Admiral Zumwalt, we were allowed to waive the specs. The table and desk we delivered cost only about $250,000 (prototypes). They were never ever used for anything. We earned the $250,000 - we put out that much work. It certainly was not our fault that the navy was so stupid about their procurement. >There's a question of honesty. I think many contractors take the >P.T. Barnum view--"There's a sucker born every minute." They seem to figure >that if the purchaser is so silly that they don't realize they're being >fleeced, the seller doesn't have any responsibility to point out the problem, >or the cheaper places simple parts and tools could be bought. >--Lauren-- Welcome to capitalism! It still works better than the alternative! The military's insistence on squeezing profit everywhere they can, and auditing everyone to death on trivia, leads to a desire by suppliers to make their profit where they can. The fact that the dollar outweighs ethics in some people is just human nature - the ruble outweighs ethics in USSR, also. John Moore (Compuserve VETS SIG "LCB" Member) <opinions are my own, of course>
phil@amdcad.UUCP (Phil Ngai) (08/12/85)
In article <730@vortex.UUCP> root@vortex.UUCP (The Superuser) writes: >--they're a drop in the bucket compared >with the screwdrivers, ashtrays, and stool feet. > >--Lauren-- I would submit that instead of complaining about defense contractors charging too much for an ordinary screwdriver we should think about whether it is reasonable to buy such things from them instead of our local hardware store. I once looked up the price of an ordinary bolt from my Honda dealer for my Honda Civic. Surprise! It was much more expensive than the same thing from my hardware store. Do you think I should get mad at Honda? However, if the tool is not something you can buy from ordinary sources then I think we should acknowledge that things bought in small production runs are naturally going to be very expensive. -- Yuck! This coke tastes different! Phil Ngai (408) 749-5720 UUCP: {ucbvax,decwrl,ihnp4,allegra}!amdcad!phil ARPA: amdcad!phil@decwrl.ARPA
foy@aero.ARPA (Richard Foy ) (08/12/85)
In article <257@anasazi.UUCP> john@anasazi.UUCP (John Moore) writes: >>--Lauren-- > Welcome to capitalism! It still works better than the alternative! The >military's insistence on squeezing profit everywhere they can, and auditing >everyone to death on trivia, leads to a desire by suppliers to make their profit >where they can. The fact that the dollar outweighs ethics in some people >is just human nature - the ruble outweighs ethics in USSR, also. > > John Moore (Compuserve VETS SIG "LCB" Member) > Are the only two alternatives unethical capitalism or even worse USSR rubles? richard
phil@amdcad.UUCP (Phil Ngai) (08/12/85)
In article <717@vortex.UUCP> lauren@vortex.UUCP (Lauren Weinstein) writes: >I saw what that ashtray looks like. Any high school metalshop student >could throw one together for about $30 in parts, tops. Recently there was a lot of noise in the popular press about how the Air Force was paying $7200 for coffee pots on airplanes. These responsible journalists somehow failed to uncover or report the fact that Delta Airlines, buying from a commercial vendor like Lockheed, pays around $4000 for an item with similar functionality. Having seen a small part of the mountains of paperwork the government needs to buy anything, I think the markup from $4000 to $7200 is easily explained, if not surprisingly low. We all know what coffee pots cost at K-mart and probably Lauren's metalshop could put one together for $50. But I must conclude that coffee pots on airplanes are much more complicated than the kind that K-mart sells and that's why they cost so much more. We don't need to invoke bottomless greed to explain it. Even if we think our government is blind to ripoffs, Delta Airlines can not survive without keeping tight controls on costs. Yet they too pay outrageous prices for coffee pots. -- Yuck! This coke tastes different! Phil Ngai (408) 749-5720 UUCP: {ucbvax,decwrl,ihnp4,allegra}!amdcad!phil ARPA: amdcad!phil@decwrl.ARPA
js2j@mhuxt.UUCP (sonntag) (08/12/85)
> Recently there was a lot of noise in the popular press about how the > Air Force was paying $7200 for coffee pots on airplanes. These responsible > journalists somehow failed to uncover or report the fact that Delta > Airlines, buying from a commercial vendor like Lockheed, pays around $4000 > for an item with similar functionality. Having seen a small part of the > mountains of paperwork the government needs to buy anything, I think > the markup from $4000 to $7200 is easily explained, if not surprisingly > low. > ...But I must conclude that > coffee pots on airplanes are much more complicated than the kind that > K-mart sells and that's why they cost so much more. We don't need to invoke > bottomless greed to explain it. Even if we think our government is > blind to ripoffs, Delta Airlines can not survive without keeping tight > controls on costs. Yet they too pay outrageous prices for coffee pots. > Phil Ngai (408) 749-5720 Of course, Delta has to serve coffee to a few hundred passengers out of their coffee pots. I guess the military has some transport jets which can carry similar numbers of passengers but seriously doubt if the $7200 number is referring to such a coffee pot. (if it was, don't you think some defense dept. spokesman would have explained?) -- Jeff Sonntag ihnp4!mhuxt!js2j "My SO is red hot. Your SO aint doodely squat."
bill@persci.UUCP (08/13/85)
In article <1052@mhuxt.UUCP> js2j@mhuxt.UUCP (sonntag) writes: >> [Phil Ngai] [...]These responsible >> journalists somehow failed to uncover or report the fact that Delta >> Airlines, buying from a commercial vendor like Lockheed, pays around $4000 >> for an item with similar functionality.[...] ...But I must conclude that >> coffee pots on airplanes are much more complicated than the kind that >> K-mart sells and that's why they cost so much more. > Of course, Delta has to serve coffee to a few hundred passengers out of >their coffee pots. I guess the military has some transport jets which can >carry similar numbers of passengers but seriously doubt if the $7200 number >is referring to such a coffee pot. [...] >Jeff Sonntag ihnp4!mhuxt!js2j > "My SO ain't doodly squat.. Jeff, please re-read Phil's statement. The problem is the *complexity* of the pot, *not* the number of people served from it. Sure, making larger quantities of coffee probably increases the expense of the pot, but as in ground-based pots, it's not very big. -- William Swan {ihnp4,decvax,allegra,...}!uw-beaver!tikal!persci!bill
doug@terak.UUCP (Doug Pardee) (08/15/85)
> > ...But I must conclude that > > coffee pots on airplanes are much more complicated than the kind that > > K-mart sells and that's why they cost so much more. > > Of course, Delta has to serve coffee to a few hundred passengers out of > their coffee pots. I guess the military has some transport jets which can > carry similar numbers of passengers but seriously doubt if the $7200 number > is referring to such a coffee pot. You may laugh, but a couple of years ago a corporate biz-jet was nearly lost (with all aboard) because of a coffee pot. I wish I could remember the story clearly, but it had to do with the built-in coffee pot shorting out and catching fire. Because a coffee pot is a high-power device, it was located right at the main electrical busses, and the fire burned through all three power busses. Control over the pressurization system was lost, and the plane depressurized. The pilot had to manually shut off the oxygen supply to prevent oxygen from getting to the fire. With no pressurization and no supplemental oxygen, a "crash descent" was needed in order to get to a "breathable" altitude before everyone on board blacked out. Speaking of airborne coffee -- if you want some excitement, take a thermos of coffee aloft and open it. If you'd rather skip the excitement, calculate the boiling point of coffee at 20"Hg and compare that with the temperature that a thermos will hold coffee at. -- Doug Pardee -- CalComp -- {seismo!noao,decvax!noao,ihnp4}!terak!doug
john@anasazi.UUCP (John Moore) (08/21/85)
In article <346@aero.ARPA> foy@aero.UUCP (Richard Foy (Veh. Systems)) writes: >In article <257@anasazi.UUCP> john@anasazi.UUCP (John Moore) writes: >>>--Lauren-- >> Welcome to capitalism! It still works better than the alternative! The >>military's insistence on squeezing profit everywhere they can, and auditing >>everyone to death on trivia, leads to a desire by suppliers to make their profit >>where they can. The fact that the dollar outweighs ethics in some people >>is just human nature - the ruble outweighs ethics in USSR, also. >> >> John Moore (Compuserve VETS SIG "LCB" Member) >> >Are the only two alternatives unethical capitalism or even worse USSR rubles? > >richard That the dollar outweighs ethics in some people doesn't imply that it outweighs ethics in all people. A few unethical capitalists doesn't imply that there is a system of "unethical capitalism". Let me throw the question back on you: What alternatives are there? -- John Moore (NJ7E) {decvax|ihnp4|hao}!noao!terak!anasazi!john (602) 952-8205 (day or evening)