Re: [FT] Military Overcharging

From: "David Rodemaker" <dar@horusinc.com>

> Once again, there is a less fine line between "maximizing
profitability"
and
> "charging the market price" to "sticking to the government because we
can"
> (remember those $900 toilet seats, and $500 wrenches back in the 70's
or
> 80's?) I would guess that it happens more than we know but less often
than
> we are afraid of...

Tall Tales But True Dept.

The story of the $500 wrench.

This was a special tool designed to unlock a bolt on an F-16A's ejector
seat.
It was found that a $2 wrench could do the same job, except for
capturing
the bolt afterwards.

Big hoo-ha. $2 wrenches rule.

Then someone dropped the bolt while unscrewing it. To retrieve it took
nearly
$500,000 worth of effort in taking apart the F-16 and re-assembling it.
That's
why the menufacturer had gone to the trouble of making special tools...
after
awhile, the governernment spent a lot of money getting new wrenches, and
even
more getting the cockpit re-designed in the F-16C.

The story of the $200,000 coffee machine.

The USAF has a machine called the C-5A Galaxy It's capable of
transporting
300
troops pretty much anywhere in the world, and is designed for long
flights,
long,
long flights that can end up in a combat zone.

Do you have any idea how much coffee gets consumed by 200 paratroops
about
to make a drop in 17 hours? So it's not your standard 4-cup
coffee-maker.

What's more, the C-5A had to be able to function in case enemy action
caused
it to de-pressurise. So the machine had to be able to take sudden
changes in
ambient pressure without exploding and sending scalding coffee
everywhere.

Now the GAO (Government Accounting Office) had a neat rule to save
money.
Any aircraft involved in a minor accident, such as tyres bursting, could
be
stripped of non-essential non-critical parts until put back in service.
they
didn't have to be re-tested if they weren't essentials, like ailerons,
but
were
"nice to have" like cushions,  or coffee machines.

So there was a requirement that all such non-essential items should have
their crash-worthiness tested, to see if they were OK to re-use without
inspection.

And all requirements had to be tested.... so, you guessed it, the
manufacturers
had to load up an old 707 with vast quantities of parts, fit
radio-guidance,
and
deliberately crash it and salvage what they could. So for 30 or so
coffee
machines,
that cost an additional $5 million or so. Yes,, they made a loss on each
one.

The $90 screw..

The GAO also had a rule that overheads involved in any purchase should
be
evenly spread between all items in the purchase. Sounds fair enough.

Until someone bought One (1) F-15A Fighter at $25,000,000 and Nine (9)
Number 3 screws at 0.01c. Plus overheads of $899.90. Total cost for
the F-15, $25,0000,089.99. Total cost of each screw, $90.00.

All was not what it seemed in the 80s...