Murphy's Law: Where This Mess Came From

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September10, 2008:  The U.S. government is suing the Boeing Corporation for overcharging, by 26 percent, on a $36 million contract to produce 57 radar decoys for B-1 bombers. The government asserts that Boeing also lied, by stating that they would build the decoys themselves when, in fact, they were having most of the work done by subcontractors. There was no assertion that the decoys were defective, just that Boeing misled the us Air Force procurement officials.

What wasn't said was that this was all about a decades old battle between the military and the defense manufacturers over what is possible, and what it should cost. The defense manufacturers complain of low profit margins on systems that are designed to use unproven, or non-existent, technologies. There are also complaints of many changes requested by Pentagon officials (both civilian and uniformed) who do not really know what they are asking for. There is also political influence, usually regarding where the work will be done (and thus in whose constituency the jobs will be.)

In the last fifty years, there has developed an arrangement to overcome these problems. The contractors are allowed to make more money on some projects, in order to cover losses in others. This is all informal, but based on the reality that, otherwise, there would literally not be enough companies willing to do the work. Many tech firms, as a matter of policy, will not work for the government. Or, they will only work as a supplier for a firm that is directly working for the government. As a contractor, the normal rules of business apply (your customer specifies that they want, and when, and you deliver it and get paid.)

On the government side, the main problem is inability to hire enough competent people. While on the commercial side it's normal for people to make a career of buying, manufacturing or selling, too many of the people on the government side are either temps or people who were not competent enough to get a job in the commercial sector. For example, the military often assigns officers temporary to procurement duty. Thus the military guy in charge of a procurement project is only there for a few years, before moving on to a different assignment (on their way to becoming a "well rounded officer.") Some of the services have tried, with some success, to make procurement a career field. But that often runs into the other problem; the government cannot pay competitive wages. Thus the better qualified person will usually be on the civilian side of the transaction. This often leads to misunderstandings, or just lack of comprehension, on the military side. Then there are the political problems, with elected officials getting involved with procurement issues out of ignorance, or concern for getting re-elected.

This is all the dark side of military procurement, and it tends to stay in the shadows. It's all generally left alone by the media because it tends to be complex, and does not offer an easy solution. But there it is, and it isn't going away.

 

 


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