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Plus Raytheon overheads and profit. Either of which might be a larger portion of the price than any one of those hardware items. I'm not saying this is necessar

Plus Raytheon overheads and profit. Either of which might be a larger portion of the price than any one of those hardware items. I'm not saying this is necessarily bad, just that it's a cost component. I bet the DoD is not super cost-sensitive for amazing weapons systems that can protect large assets, but they drive a hard bargain on butter and toilet paper. Is anyone at liberty to talk about overhead and profit margins for these kind of systems? I previously worked for a related business which precludes me from giving numbers. The laser weapon might not have a per-shot profit margin. Though they can build that into the service contract...

ufmace 10y ago
Some of that, for sure. I'm not saying that Raytheon et al are angels or anything, but in their defense, most of the "overhead" is likely due to the hoops they have to jump through to do things the way that their customer wants them to be done. I haven't worked with Government or their suppliers, but I have worked for a large company that did a lot of manufacturing of semi-exotic stuff, and their procurements demands were completely irrational. They didn't want to maintain an inventory of parts that were complex to manufacture, but required that they be available to purchase on short notice without any kind of contract or schedule, and were willing to pay any price to get that. So suppliers sprang up to hold these parts in inventory for them and supply them on-demand at vastly marked up prices, to cover their costs of maintaining the inventory. I'm not sure if any explicit corruption was involved in setting that up, but that's the kind of thing that tends to happen at large organizations. Then again, even if there wasn't any explicit corruption when setting these things up, it tends to happen later on as suppliers get established and try to bend the customer into having even more bizzare procurement rules, so that no other company could possibly comply with them and take their business.

ufmace 10y ago

Some of that, for sure. I'm not saying that Raytheon et al are angels or anything, but in their defense, most of the "overhead" is likely due to the hoops they have to jump through to do things the way that their customer wants them to be done. I haven't worked with Government or their suppliers, but I have worked for a large company that did a lot of manufacturing of semi-exotic stuff, and their procurements demands were completely irrational. They didn't want to maintain an inventory of parts that were complex to manufacture, but required that they be available to purchase on short notice without any kind of contract or schedule, and were willing to pay any price to get that. So suppliers sprang up to hold these parts in inventory for them and supply them on-demand at vastly marked up prices, to cover their costs of maintaining the inventory. I'm not sure if any explicit corruption was involved in setting that up, but that's the kind of thing that tends to happen at large organizations. Then again, even if there wasn't any explicit corruption when setting these things up, it tends to happen later on as suppliers get established and try to bend the customer into having even more bizzare procurement rules, so that no other company could possibly comply with them and take their business.