6 ms·

Weapons contractors hitting Department of Defense with inflated prices

20 points by Ambolia 3y ago

Ambolia 3y ago
A key interesting point that highlights how increased efficiency creates choking points and fragility: >Shay Assad: We have nowhere else to go. For many of these weapons that are being sent over to Ukraine right now, there's only one supplier. And the companies know it. >It wasn't always like this. The roots of the problem can be traced to 1993, when the Pentagon, looking to cut costs, urged defense companies to merge. Fifty one major contractors consolidated to five giants.
- stracer 3y ago
  How would suppressing the competition cut costs? >Shay Assad: The landscape has totally changed. In the '80s, there was intense competition amongst a number of companies. And so the government had choices. They had leverage. We have limited leverage now.
  - lcnPylGDnU4H9OF 3y ago
    They were probably not considering it under a frame of suppressing competition. If they have people spending a lot of time keeping track of various contractors (who can do what, what capacity is available from whom, etc.) then consolidating those contractors to just a handful might be a cost-cutting measure.
0zemp2c 3y ago
[flagged]
- _kbh_ 3y ago
  > is it any wonder we see mainstream media enthusiastically endorsing more and more weapons for Ukraine? this is your "textbook" demonstration of the military-industrial-complex I love how people are so jaded when America is on the right side of a conflict for the first time in a long time. America is supplying aid to a country to defend itself from an imperialistic invader, it gets to get rid of its expiring weapon stocks by donating them to a country that is decimating their biggest military rival. This arrangement is win win win for everyone involved.
  - willcipriano 3y ago
    [flagged]
    - _kbh_ 3y ago
      > We were on the right side in Iraq, with the same voices giving it full throated support, that was until the fog of war lifted and pretty much everyone accepted it was a scam. How do you think Ukraine is a scam?, I can show you hundred of videos of Ukrainians using western weapons to kill the imperialistic invaders that are trying to end their existence.
      - willcipriano 3y ago
        I can show you videos of the twin towers falling, that doesn't mean that it benefits the average citizen to go drone strike some weddings. For one thing, I question the europeans and their lackluster response to what is occurring on their continent. Why is the US taxpayer so much more invested in this contrasted to a French or German taxpayer? Personally looking at things at home we have higher priorities than this. Other nations seem to be making a similar choice given their lack of financial commitment.
        beart 3y ago
        Germany has increased their defense spending by at least $100 billion since the start of the war.
        deleted 3y ago
        [deleted]
        willcipriano 3y ago
        That's nice for them. Germany committed to send 2.47 billion in contrast to 46 and a half billion from the US. https://www.statista.com/chart/27278/military-aid-to-ukraine-by-country/ https://www.statista.com/chart/27278/military-aid-to-ukraine...
- avidiax 3y ago
  Isn't this basically what the defence production act was made for? Unfortunately, it would take a president that doesn't care about their opponents getting a huge campaign finance windfall to use that capability to restore competitive bidding. And with the current Supreme Court, I expect that opening the designs for competitive bidding would be considered a "taking", so it would be a matter of time before the changes get reversed or weakened.
- sharemywin 3y ago
  Exactly it's way easier for the socialists to take over when there are only a couple of monopolies to take over instead of a bunch of smaller businesses.
  - deleted 3y ago
    [deleted]
  - flangola7 3y ago
    Socialists? Who?
- _djo_ 3y ago
  Looking at what the US has sent to Ukraine, though, nearly all of it has been second tier equipment that was nearing retirement/replacement due to either being close to time expiring or because it was nearing obsolescence. The same is true for other countries. Even the F-16s being mentioned at the moment will be recently retired ones, not aircraft drawn from front line fleets. Javelins are one of the only front line systems, and not that much of a profit maker for the military industrial complex given the relatively low per unit price and according to reports it was the oldest in the inventory that were sent. The Raytheons and Boeings of the world would much rather the US be buying big ticket items like ships, fighter aircraft, and AMRAAMs than lower margin items like Javelins and 155mm artillery ammunition. Military systems go through a constant cycle of acquisition, usage, upgrades, retirement, and replacement. Some systems, like big aircraft with relatively undemanding flight and usage profiles, can be kept operational and upgraded for a long time. Others, like missiles, have shorter lifetimes and are less worth refurbishing and upgrading after a point. A certain proportion of what the US has donated was going to have to be retired, disposed of, and replaced in the next few years anyway.
- ryanbytes 3y ago
  [dead]
ryanbytes 3y ago
[dead]
fuzzfactor 3y ago
1812?
RecycledEle 3y ago
Be a defense contractor, making military widgets. Fed.gov asks you to ramp up production from 100 military widgets a month to 500. You are running your assembly line 6 hours a day to make 100 a month, with maintenance after hours. You put on 2 more shifts, and run 3 different 8-hour shifts. An MBA would say you are better utilizing your capital investment in your assembly line, and are better utilizing your fixed overhead (e.g., rent on the manufacturing plant.) The guy who fixes the drill press is worried about the lack of maintenance and that burning smell from the drill press' drive belt. So you buy another drill press on credit, with no guarantee that this whole Ukraine thing will not be over tomorrow. You can not just buy another drill press. Your contract says you get partial reimbursement if it's "Made in America." You could get a deal if you could wait for delivery, but you need it tonight, so you send a gopher to Elliot's Hardware with your debit card and instructions to do his best, but to come back with a big bad drill press no matter what. Your HR people spent the money to recruit a bunch of FNGs (F#$@% New Guys) and are now trying to get every competent employee to change shifts and to train FNGs. This means extra pay to the competent people who can train someone. Adding more people to a late project makes it later, for a while. Your production slows and you are burning cash. QA has scrapping most of what you produce. As you increase your orders from your suppliers, they are going a something similar ramp-up, and know you have no choice, so they are raising their prices. You know people are dying, and are spending cash to make this work. You think of that Ukrainian girl in your kid's class at school. She has the meanest face you've ever seen on a kid that age. You literally just bet your company's future on the orders continuing for a minimum of 2 more months, with tears in your eyes. People are dying. In the past, Fed.gov sometimes came through and paid for your effort, and sometimes they screwed you. It's way too common for Fed.gov to cancel orders and expect that since they cancelled the order before it was delivered that they should not pay anything. Then the lamestream noise media at 60 minutes runs a story accusing you of price gouging. I've been there, I've done that, and I'm pretty sure I've been blamed for selling some $600 hammers. If you need it now and lives are on the line, I can spend money to get it sooner, but that is going to be expensive. The alternative is January, 1942 when American kids were training with brooms because they did not have enough rifles. We need to be mass producing missile frigates, oil-tanker-conversions as escort carriers, 1,000s of F35s, 1,000s of F22s, renovating every single plane in the Bone Yard that can be turned into a drone, and sending $1 Billion a month to SpaceX to get the StarShip operational for the High Frontier. It's not going to happen. /rant

20 points by Ambolia 3y ago

A key interesting point that highlights how increased efficiency creates choking points and fragility: >Shay Assad: We have nowhere else to go. For many of these weapons that are being sent over to Ukraine right now, there's only one supplier. And the companies know it. >It wasn't always like this. The roots of the problem can be traced to 1993, when the Pentagon, looking to cut costs, urged defense companies to merge. Fifty one major contractors consolidated to five giants.

stracer 3y ago
How would suppressing the competition cut costs? >Shay Assad: The landscape has totally changed. In the '80s, there was intense competition amongst a number of companies. And so the government had choices. They had leverage. We have limited leverage now.
- lcnPylGDnU4H9OF 3y ago
  They were probably not considering it under a frame of suppressing competition. If they have people spending a lot of time keeping track of various contractors (who can do what, what capacity is available from whom, etc.) then consolidating those contractors to just a handful might be a cost-cutting measure.

0zemp2c 3y ago

[flagged]

_kbh_ 3y ago
> is it any wonder we see mainstream media enthusiastically endorsing more and more weapons for Ukraine? this is your "textbook" demonstration of the military-industrial-complex I love how people are so jaded when America is on the right side of a conflict for the first time in a long time. America is supplying aid to a country to defend itself from an imperialistic invader, it gets to get rid of its expiring weapon stocks by donating them to a country that is decimating their biggest military rival. This arrangement is win win win for everyone involved.
- willcipriano 3y ago
  [flagged]
  - _kbh_ 3y ago
    > We were on the right side in Iraq, with the same voices giving it full throated support, that was until the fog of war lifted and pretty much everyone accepted it was a scam. How do you think Ukraine is a scam?, I can show you hundred of videos of Ukrainians using western weapons to kill the imperialistic invaders that are trying to end their existence.
    - willcipriano 3y ago
      I can show you videos of the twin towers falling, that doesn't mean that it benefits the average citizen to go drone strike some weddings. For one thing, I question the europeans and their lackluster response to what is occurring on their continent. Why is the US taxpayer so much more invested in this contrasted to a French or German taxpayer? Personally looking at things at home we have higher priorities than this. Other nations seem to be making a similar choice given their lack of financial commitment.
      - beart 3y ago
        Germany has increased their defense spending by at least $100 billion since the start of the war.
        deleted 3y ago
        [deleted]
        willcipriano 3y ago
        That's nice for them. Germany committed to send 2.47 billion in contrast to 46 and a half billion from the US. https://www.statista.com/chart/27278/military-aid-to-ukraine-by-country/ https://www.statista.com/chart/27278/military-aid-to-ukraine...
avidiax 3y ago
Isn't this basically what the defence production act was made for? Unfortunately, it would take a president that doesn't care about their opponents getting a huge campaign finance windfall to use that capability to restore competitive bidding. And with the current Supreme Court, I expect that opening the designs for competitive bidding would be considered a "taking", so it would be a matter of time before the changes get reversed or weakened.
sharemywin 3y ago
Exactly it's way easier for the socialists to take over when there are only a couple of monopolies to take over instead of a bunch of smaller businesses.
- deleted 3y ago
  [deleted]
- flangola7 3y ago
  Socialists? Who?
_djo_ 3y ago
Looking at what the US has sent to Ukraine, though, nearly all of it has been second tier equipment that was nearing retirement/replacement due to either being close to time expiring or because it was nearing obsolescence. The same is true for other countries. Even the F-16s being mentioned at the moment will be recently retired ones, not aircraft drawn from front line fleets. Javelins are one of the only front line systems, and not that much of a profit maker for the military industrial complex given the relatively low per unit price and according to reports it was the oldest in the inventory that were sent. The Raytheons and Boeings of the world would much rather the US be buying big ticket items like ships, fighter aircraft, and AMRAAMs than lower margin items like Javelins and 155mm artillery ammunition. Military systems go through a constant cycle of acquisition, usage, upgrades, retirement, and replacement. Some systems, like big aircraft with relatively undemanding flight and usage profiles, can be kept operational and upgraded for a long time. Others, like missiles, have shorter lifetimes and are less worth refurbishing and upgrading after a point. A certain proportion of what the US has donated was going to have to be retired, disposed of, and replaced in the next few years anyway.
ryanbytes 3y ago
[dead]

ryanbytes 3y ago

[dead]

fuzzfactor 3y ago

1812?

RecycledEle 3y ago

Be a defense contractor, making military widgets. Fed.gov asks you to ramp up production from 100 military widgets a month to 500. You are running your assembly line 6 hours a day to make 100 a month, with maintenance after hours. You put on 2 more shifts, and run 3 different 8-hour shifts. An MBA would say you are better utilizing your capital investment in your assembly line, and are better utilizing your fixed overhead (e.g., rent on the manufacturing plant.) The guy who fixes the drill press is worried about the lack of maintenance and that burning smell from the drill press' drive belt. So you buy another drill press on credit, with no guarantee that this whole Ukraine thing will not be over tomorrow. You can not just buy another drill press. Your contract says you get partial reimbursement if it's "Made in America." You could get a deal if you could wait for delivery, but you need it tonight, so you send a gopher to Elliot's Hardware with your debit card and instructions to do his best, but to come back with a big bad drill press no matter what. Your HR people spent the money to recruit a bunch of FNGs (F#$@% New Guys) and are now trying to get every competent employee to change shifts and to train FNGs. This means extra pay to the competent people who can train someone. Adding more people to a late project makes it later, for a while. Your production slows and you are burning cash. QA has scrapping most of what you produce. As you increase your orders from your suppliers, they are going a something similar ramp-up, and know you have no choice, so they are raising their prices. You know people are dying, and are spending cash to make this work. You think of that Ukrainian girl in your kid's class at school. She has the meanest face you've ever seen on a kid that age. You literally just bet your company's future on the orders continuing for a minimum of 2 more months, with tears in your eyes. People are dying. In the past, Fed.gov sometimes came through and paid for your effort, and sometimes they screwed you. It's way too common for Fed.gov to cancel orders and expect that since they cancelled the order before it was delivered that they should not pay anything. Then the lamestream noise media at 60 minutes runs a story accusing you of price gouging. I've been there, I've done that, and I'm pretty sure I've been blamed for selling some $600 hammers. If you need it now and lives are on the line, I can spend money to get it sooner, but that is going to be expensive. The alternative is January, 1942 when American kids were training with brooms because they did not have enough rifles. We need to be mass producing missile frigates, oil-tanker-conversions as escort carriers, 1,000s of F35s, 1,000s of F22s, renovating every single plane in the Bone Yard that can be turned into a drone, and sending $1 Billion a month to SpaceX to get the StarShip operational for the High Frontier. It's not going to happen. /rant