Esculating Procurement Cost

[JALU3]

OK, I am reading Defense Industry Daily, just because I try to maintain enough knowledge to be a novice policy wonk . . . and I keep reading on programs seeing signficant cost increases, and decreased capability goal achievement. What is going on with the defense industry? There are several programs that have been down scaled or threatened with the chopping block due these issues.

Can some of the more experienced and learned individuals on this board explain this to me. Thanks.

[baggygreen]

cynically speaking, its probably that contracters deliberately delay delivering projects as long as they can to ensure maximum cash (great when you're paid by the man-hour). Fines and penalties were then introduced to try and dissuade this. Contracters thought bugger this, it means we have to work hard, and so lots of bigwigs and paper-pushers take tours to see how hard the project is to complete in the allotted timeframe, and so these desk-jockeys say oh we don't need it to do this or protect that, we can lop it off.

Net result - contracters can slack off and still get overpaid and then deliver what they're told to, which happens to be a completely gutted version of the original project.



In reality, theres a lot more to consider, things like rising costs, inflation, unexpected demand for different resources or supplies, the inevitable human error which needs to be corrected, machines breaking down.. and much much more

[Digital_Trucker]

All that and the "cost plus" contract that seems to be fancied by the government which allows the contractor to bid at a low price and pass all the "cost overruns" on to the government. Pure speculation on my part as I only know a little about the process and what I've read about it.

[SUBMAN1]

I just think that these companies purposely underbid things to get the work, and then purposely fail to deliver to get more cash. Probably said in better detail above. Time to introduce massive fines, not small ones for playing with out tax dollars like this.

-S

[Digital_Trucker]

Or make the contractor deliver the product at the price they bid and at the time they bid being able to deliver.

[SUBMAN1]

Originally Posted by Digital_Trucker

Or make the contractor deliver the product at the price they bid and at the time they bid being able to deliver.

That might make people wise up!

[bookworm_020]

Originally Posted by Digital_Trucker

Or make the contractor deliver the product at the price they bid and at the time they bid being able to deliver.

There won't be many contractors left after the that goes through. I do believe that it does need to be tightned up to stop these contractor ripping off the taxpayer (Not just the US, Australia as well!)

[JALU3]

Well this goes for any defense contract regardless of nation, I am just writing from a US perspective due to the resources available to me and I am interested in my own nation's defense precurements. Many recent contracts that seem to have been going smoothly have been cut, and then restarted, thus increasing cost, which is the governments fault. Some of the contracts appear to be duplicates of similar weapons systems, that could have been done jointly. Some contracts have just been poorly mis-managed and have ballooned in cost.
I understand that military hardware has requirements that are above and beyond their civilian counterparts, or are not even within the civilian spectrum, but I find it hard to believe that those requirements cannot be meet within a reasonable time frame, and budget.