I worked at Raytheon for five years as a software engineer, and this article understates how corrupt and backwards the industry’s contracting dynamics are. Ther

I worked at Raytheon for five years as a software engineer, and this article understates how corrupt and backwards the industry’s contracting dynamics are. There are some aspects that are directly opposed to efficiency. A few examples stand out to me. One is how labor charges work. When contractors bid on a project, they estimate how many hours of labor it will take to complete (worth mentioning they often underestimate, since there are no consequences for doing so). Then, as they work those hours, they get paid. For instance, if a contractor is awarded a contract with a million dollars worth of labor (there is a fixed dollar amount per head used to compute this) that will take 1,000 hours to complete, each hour will earn them $1,000. There are numerous ways that this causes the government to get a bad deal. First, workers are not fungible. The productivity of any two workers is not the same. Even over large averages, the productivity is not the same. Some contracts are staffed by all-stars, and others by slouches. The government pays the same dollar amount per hour for both contracts. Even if workers were fungible, their progress is not uniform. There are periods of time where they will complete huge amounts of work, and there are less productive times, owing to human nature, impediments, etc. Again, the government pays the same amount. I should also mention that there is a profit margin built into the amount that contractors get paid for labor. In other words, they make money by having employees “working” on contracts. This creates a corrupt incentive where each contractor wants to be as inefficient as possible, since they make money per inefficiency, so long as they can charge less than the other bids. The end result is often that when a contract reaches “100% complete” in terms of billable hours, the project is not complete. Yet the government has often sunk tens or hundreds of millions, or billions, into this project. They will not pull the plug on it, since they need it. They cannot switch contractors, due to the IP involved, the expertise built up, etc. So, they keep writing checks to the contractor until the project is finished. A solution nobody seems to talk about: nationalize national defense. I know, I hate bureaucracy as much as the next guy. The government is certainly inefficient. Government contractors are capable of every bit of inefficiency the government is capable of, and more. It truly makes no sense to me, that the government stands for being gouged via profit margins every time it purchases military equipment. The flip side of this is, defense contracting is political these days, and in my opinion, in all the wrong ways. One side argues for increased defense spending, the other argued for decreased defense spending. Neither argue for improved defense outcomes. Politicians want to protect their constituents’ jobs; a lot of folks work for these contractors. If defense spending were nationalized, the duplications of effort, and the corresponding jobs, go poof. Inefficiency is great for a lot of the parties involved, and so the taxpayers get a bad deal.