Your tax dollars at work - Page 2 - PeachParts Mercedes-Benz Forum

aklim · #16 01-13-2011, 11:16 PM

Quote:

Originally Posted by Craig

Yup, low-ball the initial contract and wait for the inevitable changes.

Which brings us to the question. Why would a buyer go for such a thing? Would you agree to buy a car for $40K only to have the dealer charge you $44K by the time all is said and done and you drive off?

Maybe somebody is getting a kickback which is the only reason I can think of for a consumer to agree to it.

#17 01-13-2011, 11:17 PM

Quote:

Originally Posted by aklim

But that is the point of my question. What is the point of a contract if it has a cost overrun feature? Couldn't I bid low and get the contract only to say "Cost Overrun". Sorry. $10 is the old price. $50 is the new price.

They do need to justify the cost changes, but the government always makes changes to the requirements or the schedule after the fact. The additional cost of those changes are "negotiated" after the fact with the contractor; at that point it is not a competitive process.

Chas H · #18 01-13-2011, 11:20 PM

Quote:

Originally Posted by aklim

But that is the point of my question. What is the point of a contract if it has a cost overrun feature? Couldn't I bid low and get the contract only to say "Cost Overrun". Sorry. $10 is the old price. $50 is the new price.

You catch on pretty fast. Another trick is contract officers retire/quit then go to work for a successful bidder.

Chas H · #19 01-13-2011, 11:23 PM

Quote:

Originally Posted by Craig

They do need to justify the cost changes, but the government always makes changes to the requirements or the schedule after the fact. The additional cost of those changes are "negotiated" after the fact with the contractor; at that point it is not a competitive process.

Change orders! I worked for a defense contractor and the company lived by change orders.

#20 01-13-2011, 11:25 PM

Quote:

Originally Posted by aklim

Which brings us to the question. Why would a buyer go for such a thing? Would you agree to buy a car for $40K only to have the dealer charge you $44K by the time all is said and done and you drive off?

Maybe somebody is getting a kickback which is the only reason I can think of for a consumer to agree to it.

In reality, I enter a contract for a $50k E350 and get that cost included in my annual budget and approved by congress. At some point I come up with a reason that I really need a $70k E550 4matic instead. I go back to congress and tell them that the $50k car they approved will no longer do the job, but the contract has already been signed. The good news is that for only $20k more the vendor will supply what I really need. Eventually I retire and get a nice VP job with that vendor.

aklim · #21 01-13-2011, 11:38 PM

Quote:

Originally Posted by Craig

In reality, I enter a contract for a $50k E350 and get that cost included in my annual budget and approved by congress. At some point I come up with a reason that I really need a $70k E550 4matic instead. I go back to congress and tell them that the $50k car they approved will no longer do the job, but the contract has already been signed. The good news is that for only $20k more the vendor will supply what I really need. Eventually I retire and get a nice VP job with that vendor.

Yes but the only way that works is if Congress approves the $20K more. So, question is why would they? At the rate it goes, why not just sign over a blank check and let the contractor fill it up as he wishes? Here is a crazy theory. Could it be that it gets done this way because somebody is getting their pocket padded?

#22 01-13-2011, 11:45 PM

Quote:

Originally Posted by aklim

Yes but the only way that works is if Congress approves the $20K more. So, question is why would they? At the rate it goes, why not just sign over a blank check and let the contractor fill it up as he wishes? Here is a crazy theory. Could it be that it gets done this way because somebody is getting their pocket padded?

It's just how the game works, congress is aware that the cost will always increase. As a matter of fact, that contractor is in one of the congressmen's districts. In the case of a big contract, their are dozens of subcontractors in lots of congressmen's districts. After approving the initial budget and committing a large amount of money, they have little choice in approving the changes (there is always a very credible story about why the change is required). It's not a blatant pay-off, just an "understanding."

Chas H · #23 01-13-2011, 11:50 PM

Quote:

Originally Posted by Craig

It's just how the game works, congress is aware that the cost will always increase. As a matter of fact, that contractor is in one of the congressmen's districts. In the case of a big contract, their are dozens of subcontractors in lots of congressmen's districts. After approving the initial budget and committing a large amount of money, they have little choice in approving the changes (there is always a very credible story about why the change is required). It's not a blatant pay-off, just an "understanding."

Most of the money is spent here in the US where it does add to the GDP. It's not like we're financing the retirement fund Mid Eastern politicos.

aklim · #24 01-13-2011, 11:51 PM

Quote:

Originally Posted by Craig

It's just how the game works, congress is aware that the cost will always increase. As a matter of fact, that contractor is in one of the congressmen's districts. In the case of a big contract, their are dozens of subcontractors in lots of congressmen's districts. After approving the initial budget and committing a large amount of money, they have little choice in approving the changes (there is always a very credible story about why the change is required). It's not a blatant pay-off, just an "understanding."

Congress isn't straight as an arrow? Say it ain't so.

Here is what I think happens on the Congressional side. The know they need a $50 million plane. They let it slide in at $20 million, push their change orders like Chas said. Viola. $55 million plane. Contractors are happy, Congress is happy. Congressman's district has jobs paid for by others and they are happy. Congressman gets re-elected. Company is happy because they got in via a stripped down low bid.

anthonyb · #25 01-13-2011, 11:56 PM

Quote:

Originally Posted by Craig

It's just how the game works, congress is aware that the cost will always increase. As a matter of fact, that contractor is in one of the congressmen's districts. In the case of a big contract, their are dozens of subcontractors in lots of congressmen's districts. After approving the initial budget and committing a large amount of money, they have little choice in approving the changes (there is always a very credible story about why the change is required). It's not a blatant pay-off, just an "understanding."

Plus, when you are talking about contractors in districts, it becomes a "local jobs" issue - hence all the people with big local defense industries or military bases tend to be hawkish on defense spending. It's hard to get re-elected on a platform of putting your constituents out of work.

retmil46 · #26 01-14-2011, 12:01 AM

Quote:

Originally Posted by aklim

Congress isn't straight as an arrow? Say it ain't so.

Here is what I think happens on the Congressional side. The know they need a $50 million plane. They let it slide in at $20 million, push their change orders like Chas said. Viola. $55 million plane. Contractors are happy, Congress is happy. Congressman's district has jobs paid for by others and they are happy. Congressman gets re-elected. Company is happy because they got in via a stripped down low bid.

Now you're catching on.

#27 01-14-2011, 01:12 AM

Yup, just think of it as another "stimulus package." Real jobs get created, the local tax base is increased, and the government makes sure that these industries stay viable. Of course, if you don't live in an area that benefits you're sorta getting hosed by this arrangement.

Mistress · #28 01-14-2011, 01:00 PM

i checked the date and it's rally you Bot- welcome back. By far, the best fighter plane was the P51 Mustang....

Mike D · #29 01-14-2011, 01:13 PM

Of course the best part is we get to have the latest, greatest fighter which nobody else will have, with of course the exception of:

The United States is covering 90 percent of the cost of the development but has participation from Britain, Italy, Turkey, the Netherlands, Canada, Denmark, Norway and Australia.
Other nations, including Israel and Singapore, have signed contracts to buy the plane.

And who all are the "other nations". Let's see, Saudi Arabia, South Korea, ....

Hatterasguy · #30 01-14-2011, 02:50 PM

Quote:

Originally Posted by Chas H

It appears there are a number of "customers". If the DOD prices the new plane correctly, the US should make a profit. Right?

That's the idea, also it helps when allies use the same stuff.

Its a good aircraft and we need to upgrade so we really don't have a choice. Either pay the bill or have a 2nd rate air force.