4 ms·

There was an interesting article going around explaining accounting artifacts in the DoD from the late '90s. See 'the myth of the $600 hammer': https://www.gov

There was an interesting article going around explaining accounting artifacts in the DoD from the late '90s. See 'the myth of the $600 hammer': https://www.govexec.com/federal-news/1998/12/the-myth-of-the-600-hammer/5271/ https://www.govexec.com/federal-news/1998/12/the-myth-of-the...

denton-scratch 3y ago
Thanks, that's what this article reminded me of.
kcatskcolbdi 3y ago
>The military bought the hammer, Kelman explained, bundled into one bulk purchase of many different spare parts. But when the contractors allocated their engineering expenses among the individual spare parts on the list-a bookkeeping exercise that had no effect on the price the Pentagon paid overall-they simply treated every item the same. So the hammer, originally $15, picked up the same amount of research and development overhead-$420-as each of the highly technical components, recalled retired procurement official LeRoy Haugh. (Later news stories inflated the $435 figure to $600.) "we didn't ACTUALLY spend that much on a hammer, we just averaged it out across a bulk purchase! See, we aren't terrible with money." Framing something as 'the myth of the $600 hammer' is implicitly pointing to external sources (congress, journalists) and messaging that they 'invented a myth' that the military spent $600 on a hammer. They didn't invent anything. They worked with the information that was provided to them by the military. If you wanted to discuss the same issue, but under a framing that wasn't disingenuous, you could title it something like 'the reality of abysmal and misleading accounting throughout the military and their contractors'.
- xxpor 3y ago
  It's still a story of people getting mad about something they don't understand.
  - kcatskcolbdi 3y ago
    If someone shoots me in the foot I don't need to understand the mechanics of a gun to get upset about it.
    - ceejayoz 3y ago
      If someone has a good reason to shoot you in the foot, your being upset about it doesn't necessarily make it the wrong choice.
      - fiestaman 3y ago
        What's the good reason for this type of pro rata accounting?
        ceejayoz 3y ago
        Given "a bookkeeping exercise that had no effect on the price the Pentagon paid overall", I'd propose "it saved time, which costs taxpayers money". Given the hammer was actually $15, there's presumably a corresponding item that's also listed at $600 for ease of accounting that normally costs something like $1,200. "Pentagon gets 50% off computer monitor" is a less exciting headline, though.
culi 3y ago
I don't understand why the article is titled "the myth [...]". It's exactly what it sounds like. The US "spent" (imo: handed out) $600 per hammer. It doesn't matter if it was one hammer or the average price of many hammers. This is a repeating pattern. See also the $10k toilet seat: https://www.washingtonpost.com/business/capitalbusiness/the-air-forces-10000-toilet-cover/2018/07/14/c33d325a-85df-11e8-8f6c-46cb43e3f306_story.html https://www.washingtonpost.com/business/capitalbusiness/the-... Even from this article we see a pattern: > In 2020, the Pentagon paid Boeing over $200,000 for four of the trash cans, translating to roughly $51,606 per unit. In a 2021 contract, the company charged $36,640 each for 11 trash containers, resulting in a total cost of more than $400,000. The apparent overcharge cost taxpayers an extra $600,000 between the two contracts. > In another case, Lockheed Martin hiked the price of an electrical conduit for the P-3 plane as much as 14 fold, costing the Pentagon an additional $133,000 between 2008 and 2015. > Jamaica Bearings — a company that distributes parts manufactured by other firms — sold the Department of Defense 13 radio filters that had once cost $350 each for nearly $49,000 per unit in 2022. The apparent markup cost taxpayers more than $600,000 in extra fees.
culi 3y ago
A quick look at an example of the big-ticket items immediately shows that's not what's going on here. From the article: > The investigation also revealed that Raytheon Technologies had raised the price of Stinger missiles from $25,000 to more than $400,000 per unit. “Even accounting for inflation and some improvements, that’s a seven-fold increase,” Shay Assad, a former Pentagon acquisitions official, told 60 Minutes. See also, > Experts say much of that contractor price gouging has worsened over the past few decades as the military sector has experienced dramatic consolidation. In the 1990s, there were more than 50 “prime” DoD contractors capable of competing for major contracts. Now, there are only five.
- ceejayoz 3y ago
  In the case of the Stinger, it's also because they have to reengineer it a bit. https://en.wikipedia.org/wiki/FIM-92_Stinger#Replacement https://en.wikipedia.org/wiki/FIM-92_Stinger#Replacement > The original Stinger's reprogrammable microprocessor has become obsolete in 2023, and a service life extension will keep the Block I in service until 2030... Raytheon Chief Executive Greg Hayes said on 26 April: "Some of the components are no longer commercially available, and so we’re going to have to go out and redesign some of the electronics in the missile of the seeker head. That’s going to take us a little bit of time". (I'd imagine that process comes with a whole big round of destructive testing, certifications, tooling changes, acceptance testing, etc.)

denton-scratch 3y ago

Thanks, that's what this article reminded me of.

kcatskcolbdi 3y ago

>The military bought the hammer, Kelman explained, bundled into one bulk purchase of many different spare parts. But when the contractors allocated their engineering expenses among the individual spare parts on the list-a bookkeeping exercise that had no effect on the price the Pentagon paid overall-they simply treated every item the same. So the hammer, originally $15, picked up the same amount of research and development overhead-$420-as each of the highly technical components, recalled retired procurement official LeRoy Haugh. (Later news stories inflated the $435 figure to $600.) "we didn't ACTUALLY spend that much on a hammer, we just averaged it out across a bulk purchase! See, we aren't terrible with money." Framing something as 'the myth of the $600 hammer' is implicitly pointing to external sources (congress, journalists) and messaging that they 'invented a myth' that the military spent $600 on a hammer. They didn't invent anything. They worked with the information that was provided to them by the military. If you wanted to discuss the same issue, but under a framing that wasn't disingenuous, you could title it something like 'the reality of abysmal and misleading accounting throughout the military and their contractors'.

xxpor 3y ago
It's still a story of people getting mad about something they don't understand.
- kcatskcolbdi 3y ago
  If someone shoots me in the foot I don't need to understand the mechanics of a gun to get upset about it.
  - ceejayoz 3y ago
    If someone has a good reason to shoot you in the foot, your being upset about it doesn't necessarily make it the wrong choice.
    - fiestaman 3y ago
      What's the good reason for this type of pro rata accounting?
      - ceejayoz 3y ago
        Given "a bookkeeping exercise that had no effect on the price the Pentagon paid overall", I'd propose "it saved time, which costs taxpayers money". Given the hammer was actually $15, there's presumably a corresponding item that's also listed at $600 for ease of accounting that normally costs something like $1,200. "Pentagon gets 50% off computer monitor" is a less exciting headline, though.

culi 3y ago

I don't understand why the article is titled "the myth [...]". It's exactly what it sounds like. The US "spent" (imo: handed out) $600 per hammer. It doesn't matter if it was one hammer or the average price of many hammers. This is a repeating pattern. See also the $10k toilet seat: https://www.washingtonpost.com/business/capitalbusiness/the-air-forces-10000-toilet-cover/2018/07/14/c33d325a-85df-11e8-8f6c-46cb43e3f306_story.html https://www.washingtonpost.com/business/capitalbusiness/the-... Even from this article we see a pattern: > In 2020, the Pentagon paid Boeing over $200,000 for four of the trash cans, translating to roughly $51,606 per unit. In a 2021 contract, the company charged $36,640 each for 11 trash containers, resulting in a total cost of more than $400,000. The apparent overcharge cost taxpayers an extra $600,000 between the two contracts. > In another case, Lockheed Martin hiked the price of an electrical conduit for the P-3 plane as much as 14 fold, costing the Pentagon an additional $133,000 between 2008 and 2015. > Jamaica Bearings — a company that distributes parts manufactured by other firms — sold the Department of Defense 13 radio filters that had once cost $350 each for nearly $49,000 per unit in 2022. The apparent markup cost taxpayers more than $600,000 in extra fees.

culi 3y ago

A quick look at an example of the big-ticket items immediately shows that's not what's going on here. From the article: > The investigation also revealed that Raytheon Technologies had raised the price of Stinger missiles from $25,000 to more than $400,000 per unit. “Even accounting for inflation and some improvements, that’s a seven-fold increase,” Shay Assad, a former Pentagon acquisitions official, told 60 Minutes. See also, > Experts say much of that contractor price gouging has worsened over the past few decades as the military sector has experienced dramatic consolidation. In the 1990s, there were more than 50 “prime” DoD contractors capable of competing for major contracts. Now, there are only five.

ceejayoz 3y ago
In the case of the Stinger, it's also because they have to reengineer it a bit. https://en.wikipedia.org/wiki/FIM-92_Stinger#Replacement https://en.wikipedia.org/wiki/FIM-92_Stinger#Replacement > The original Stinger's reprogrammable microprocessor has become obsolete in 2023, and a service life extension will keep the Block I in service until 2030... Raytheon Chief Executive Greg Hayes said on 26 April: "Some of the components are no longer commercially available, and so we’re going to have to go out and redesign some of the electronics in the missile of the seeker head. That’s going to take us a little bit of time". (I'd imagine that process comes with a whole big round of destructive testing, certifications, tooling changes, acceptance testing, etc.)