Who's Responsible For Overpriced Military Spending?
By
Staten Island, NY Posted: 7/13/2017 1:00:00 AM
In defense of defense spending, it's not always the contractor's fault.
One of the biggest misconceptions about "overpriced" military spending is that contractor intentionally inflates prices of everyday items. While that may happen from time to time, most of the blame is on the government representatives that put together the original bids.
The essence of the problem is that when a contract calls for items with very specific details, this adds several major expenses.
First, the contractor needs to spend a certain amount of time doing research to determine if the item already exists, or if it needs to manufacture it. Even if they find that it's an off-the-shelf item, they still needed to pay people to do the research and acquire the items.
Assuming they need to manufacture it, they have to work out the expenses needed to design, manufacture, test, and deliver it.
Once they put together all those expenses, they need to divide the total by the total number of units being ordered. Unlike a mass produced item, if they only need a small number of items, the net cost could be extremely expensive. When you manufacture 10,000 widgets, the costs to research, design, manufacture, and deliver the items are divided by 10,000, but when the contract only calls for 100 or less, the cost of even everyday items can be astronomical.
The only way around this is to try to eliminate as many custom items as possible, and whenever an off-the-shelf item can be used in a bid, they need to make it as easy as possible for the contractor to find it without spending time researching and testing it to see if it meets the requirements.
Joe Crescenzi, Founder
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