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Pentagon Still Allowing Contractors To Massively Overcharge For Parts
The Daily Caller ^
| July 9 2014
| Tristyn Bloom
Posted on 07/09/2014 9:44:10 AM PDT by PoloSec
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Don't expect congress to do anything about it, its been going on forever.
Congress critters need to keep the funds flowing into their retirement accounts.
1
posted on
07/09/2014 9:44:10 AM PDT
by
PoloSec
To: PoloSec
When I was in the Air Force, small electronic parts such as a diode, which cost $0.59 for a blister pack of 5 at Radio Shack, came individually wrapped in an airtight two layer package (inside mylar, outside brown paper) with the National Stock Number, lot number, date code, and contractor's name stamped on the outside. I'm sure those diodes cost at least $5.00 each.
If the military wants COTS pricing, they have to buy in COTS packaging as well.
2
posted on
07/09/2014 9:49:58 AM PDT
by
Yo-Yo
(Is the /sarc tag really necessary?)
To: PoloSec
Change we can believe in . .
3
posted on
07/09/2014 9:50:05 AM PDT
by
ßuddaßudd
(>> F U B O << "What the hell kind of country is this if I can only hate a man if he's white?")
To: ßuddaßudd
It’s not their money, they do not care. Same goes for those negotiating contracts with public employee unions.
4
posted on
07/09/2014 9:51:17 AM PDT
by
GeronL
(Vote for Conservatives not for Republicans)
To: PoloSec
Having worked in the Defense contracting community for decades my bet is on the DOD/Govt insisting on absurd requirements for what may seem as simple commercial items, which drives the contractor to cover this in the price. If the CO is not conducting a proper cost/price analysis to determine that he is getting a “fair value” then he should be disciplined. I witness about 75% of contracts that were required to be changed by the CO for stupid reasons and the contractor has no option but to implement the change through the FAR “Changes” clause. If the contractor does not have a reasonable system of tracking these changes and submitting cost/price change proposals to the CO then they “eat it”. Contracting with the monopolistic USG is not all it is cracked up to be, particularly in complex acquisitions.
And it is far worse the further down the subcontractor chain you find yourself.
5
posted on
07/09/2014 9:53:55 AM PDT
by
Cheerio
(Barry Hussein Soetoro-0bama=The Complete Destruction of American Capitalism)
To: Yo-Yo
As well, the government often requires expensive acceptance testing for materials and they may require lots of paperwork along with the product. This stuff adds up quickly.
When they specify that a widget is supposed to be bought from a minority or woman owned business that may tack on quite a premium to the price as well. These are the rules set by Congress and the executive branch...
To: Cheerio
Indeed you are correct. Thank you for providing insight.
Too many just jump on the issue and never take the time to learn the system and why it is broken and why it results in inflated prices.
7
posted on
07/09/2014 9:58:00 AM PDT
by
Hulka
To: Yo-Yo
And COTS engineering. Government RFPs are filled with requirements that have equivalent COTs products, but with minor differences that equate to enormous engineering and tooling costs. If you have to recoup all those costs on a one-off or small-run product, then it is not going to be cheap.
Businesses that have to make a profit would never build in such costs. If FWA (fraud, waste and abuse) was an alphabet agency, their budget would dwarf most other agencies.
To: PoloSec
Here is someplace we could responsibly cut defense spending without negatively impacting readness.
9
posted on
07/09/2014 10:07:33 AM PDT
by
TBP
(Obama lies, Granny dies.)
To: PoloSec
I’ve long wondered about the proverbial $700 government toilet seats. Was it $20 for the toilet seat and $680 excess profit, or was it a $20 toilet seat with $680 of paperwork?
To: PoloSec
Don't expect congress to do anything about it, its been going on forever. Congress critters need to keep the funds flowing into their retirement accounts.
This is right on point. Having been a contracting officer in the military I witnessed the extreme influence brought to bear by politicians to secure contracts for their districts and states. Not always, but many times these contracts were let to firms that were in no way the best qualified or the lowest bidders. The pols have their hands in them all the time.
11
posted on
07/09/2014 10:10:02 AM PDT
by
Don Corleone
("Oil the gun..eat the cannoli. Take it to the Mattress.")
To: PoloSec
Actually, MOST of the cost is for fulfilling utterly BS requirements placed on procurement by the Government.
Like requiring so much of the contracts to be awarded to “small disadvantaged businesses”. Or many other asinine requirements. . .
Example: One contract I was on, we were buying semiconductor chips as part of a system build. We had to certify, with proof, multiple inspections, and a massive paperwork trail, that we were NOT purchasing materials made from “conflict minerals”. Because there’s a law which forbids the Gov from buying from “tainted” sources. . . so even if the minerals were mined and refined in the US, and used in a US Chip fab. . .we STILL had to prove no “conflict minerals”. . .
$250 dollars or so of chips caused something like $10K in additional overhead, fees, certifications, etc. . .
12
posted on
07/09/2014 10:12:26 AM PDT
by
Salgak
To: PoloSec
Why single out the Pentagon. I'll bet every agency is just as bad if not worse. Just look at this illegal alien bill.
13
posted on
07/09/2014 10:12:35 AM PDT
by
McGruff
(It's not the crime, it's the cover-up they said.)
To: PoloSec
Well, they DO have to pay for the detention facilities at Area 51 somehow...
14
posted on
07/09/2014 10:13:24 AM PDT
by
MrB
(The difference between a Humanist and a Satanist - the latter admits whom he's working for)
To: PoloSec
15
posted on
07/09/2014 10:17:41 AM PDT
by
NonValueAdded
("The Arab Spring is over. Welcome to the Jihadi Spring." Jonah Goldberg)
To: PoloSec
I stopped doing business with the federal govt for the most part. They insist on nickle and dime me as a small business. I’ve had contracts where was charging twice my hourly rate and justified it as their expenses were higher.
16
posted on
07/09/2014 10:17:54 AM PDT
by
driftdiver
(I could eat it raw, but why do that when I have a fire.)
To: Yo-Yo
The one thing the article does not address is the additional cost of doing business with the government as compared to doing business with anybody else. The documentation is staggering. The packaging can be illogical. Boilerplate procurement requests with extraneous and unrelated requirements attached.
Anyone else wanting a shovel, or a hundred shovels goes out and buys good shovels at a decent price. The government puts out 150 pages of specs and buys a shovel for 10 times the price. And buys a shovel that nobody has ever built before.
17
posted on
07/09/2014 10:20:02 AM PDT
by
DariusBane
(Liberty and Risk. Flip sides of the same coin. So how much risk will YOU accept? Vive Deco et Vives)
To: Cheerio
I have a small manufacturing company and produce aircraft parts. Aircraft parts are already expensive for commercial and general aviation with their requirement. A part I can literally make in 10 minutes will require 10 hours of paperwork and documentation. Add another 5 for packaging. I got my first military contract 3 years ago. That same 10 minute part can take 20 to 30 hours just to get out the door. I have to cover that cost. So when peopl wonder why a simple gear would cost so much don’t get too angry too quick.
To: PoloSec
Great prices come with mass production and volume sales to recover the sunk cost of setting up a production line over a large number of items. When the government requests 5 items that have been out of production for 20 years, there is a big cost to build the products again from original specs with current materials. You aren't ordering enough stock to spread the costs. If the government doesn't want to pay the price, don't order short runs of out of production items. If the government is going to start persecuting contractors for doing what was requested, there will be lots of "no bid" responses for future requests.
19
posted on
07/09/2014 10:28:38 AM PDT
by
Myrddin
To: PoloSec
What is remarkable here is that we're crabbing about $200 million in "overpayments" to DoD contractors over multiple years while Obama asks $4.6 BILLION to pay for illegal alien invaders. Moochie and Ovomit have personally racked up over $1.5 BILLION in travel expenses since taking office. That is obscene.
20
posted on
07/09/2014 10:31:27 AM PDT
by
Myrddin
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