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Because the military contracts are really lucrative. Many are worth billions on their face. Performing well on a 9 million dollar contract opens the door to l

• ocdtrekkie 8y ago
  Isn't this, in itself, a huge problem? Shouldn't public service be a low margin project? Could the fact that military contracts are so needlessly "lucrative" (despite the government having a literal monopoly on who you can sell advanced weaponry to) be why such a huge margin of your taxes go to defense?
  • mrep 8y ago
    Eh, government contracts come with all sorts of red tape that make that "lucrative" contract not so good once all the hidden costs are considered.
    • bb88 8y ago
      Yeah, there is red tape, but government contractors make this a core part of their business, so the relative risk is low. For a new company, the risk is relatively high, because there's a lot of up front work that has to be done (auditing, compliance, security, etc). But once that is ironed out, larger contracts become easier and easier. And then the only real risk is on a "firm fixed price" style of contract where the contractor assumes all the risk of product delivery. But many other are "time and materials" where the risk is shifted onto the government. If you fail to deliver a product, you're not on the hook because the government was paying for "time and materials" not the end product itself. So yes, google may actually lose money on a $9MM contract, but probably not on the next $100MM contract.