Why is it that only military hardware companies make the consumer pay for their mistakes

I am a military and military historical buff and one question all these years has troubled me .

Why is it when a company bids, specs out and signs a contract to produce XX hardware (or also in todays age software as well) for XX price IF something goes wrong, doesnt work as promised, behind schedule , ect the government AKA TAXPAYER pays to fix the problem?

I understand if the government decides to change something in mid stream it could cost more to make that change and thats a different issue (worthy of a different thread) .

But not the current problems (pick a project) of "it doesnt work as promised so the fix costs XX million dollars " so the government pays it.
it is "behind schedule" so no penalty and you "pay to fix the delay"

Lets take a non military example.

I go to my local car dealer.
I order a custom SUV . I pick out the type, style, engine, transmission, controls and audio system.
they tell me it will cost (picking a number out of a hat) 100,000 and be ready in two months.

now lets say they claim due to (not something really bad like plant burns down) manufacture issues it wont be ready for another 6 months.
if I had a set contract time they are in breach of contract and I can demand my money back. To which they would legally have to pay and the cost of the unfinished vehicle is on them

say they "low balled" me on the cost of making it to get my business.
they cannot demand I pay more than what was agreed to and expect to legally get it.
they would either have to give me what we agreed on or not only face giving me my money back. But face criminal fines, charges and/or being sued for more money back on "bait and switch"

Now say that SUV comes on time and delivered. But say the audio system doesnt work, the transmission blows , the engine control system doesnt work as spec out, or any other faults.
they cannot demand I pay for the fixes but they have to fix it until it works as promised.


but somehow if we the taxpayers (the ultimate ones paying for it) spec out (ex) a flying refueling tanker that STILL DOESNT WORK AS PROMISED we are expected to pay to make it work right,

Im sorry but am I crazy or does this seem like the rules dont apply if you tack on the word "military" or "government" to the item ?

scrounger

Moderators if this is better in rant section please move as you see fit

a reply to: scrounger

Because most contracts are cost plus, not fixed price. Cost plus sets the amount of the contract, plus incentives for certain goals being met, but doesn't set penalties for overruns. Fixed price sets the price of the contract, plus an overrun percentage, and everything above that is paid by the company. It's not the company making the taxpayer pay for it, it's the government writing the contract that allows it. Big difference.

For years, cost plus worked just fine. There were overruns, but they were kept largely under control and weren't outrageous. There was also Nunn-McCurdy, which required review at 25% overrun, and termination at 50%, unless it could be proven to be required for national security.

originally posted by: Zaphod58
a reply to: scrounger

Because most contracts are cost plus, not fixed price. Cost plus sets the amount of the contract, plus incentives for certain goals being met, but doesn't set penalties for overruns. Fixed price sets the price of the contract, plus an overrun percentage, and everything above that is paid by the company.

For years, cost plus worked just fine. There were overruns, but they were kept largely under control and weren't outrageous. There was also Nunn-McCurdy, which required review at 25% overrun, and termination at 50%, unless it could be proven to be required for national security.

Oh I agree there are some (for lack of better saying ) "sweetheart deals" in military and government contracts that are not done or logically permitted in civilian life.

along with no penalties for "screwing up" .

But where I respectfully disagree with you is the "cost plus worked just fine. there were overruns but they were kept largely under control and were not outrageous" .

I can only find two examples (maybe more I didnt see) of one in the past oh 50ish years is the SR 71 and U-2

both were either on budget or very little over.
both were experimental and in case of the sr 71 everything (from parts to even construction techniques) was from scratch.
both were close to on time

lately all military items (see f-35 and refueling tankers) are NOT EVEN CLOSE to on time, on budget or work as spec.

Along with alot of self interest to keep programs that were clearly failures continuing. Biggest example is the SGT York anti aircraft system.

but the situation you claim does not explain the clear inconsistencies between civilian and military systems

along with no contract I have seen can justify something spec out to the max and contract promise it will when it CLEARLY DOESNT we have to pay to fix it.

again example the mysterious oxygen system failure in the F-35 or the failure of systems in the new air refueling tankers.

that CLEARLY is a flaw that is from the company design... no contract should or reasonably says "if we the company screwed up you have to pay to fix it"

sorry aint buying it

scrounger

a reply to: scrounger

First, I never denied there were overruns. What I said is that they weren't to the extreme they got to as technology advanced. As equipment got more complex, the overruns got worse.

Second, you keep bringing up the KC-46, which doesn't do anything for your argument, because it's fixed price. Boeing has already paid over $3B in overruns and fixes. The Air Force, meaning the taxpayer, is paying $55M for a boom redesign because they gave Boeing bad data.

Third, bringing up OBOGS on the F-35 is also probably not the best argument. OBOGS has been causing issues with the F-18, F-22, T-45, EA-18G, and F-35. It's a systemic problem, not aircraft specific problem.

If you want to blame someone for "something spec out to the max and contract promise it will when it CLEARLY DOESNT", blame the service that wrote the contract. They write these contracts wanting everything they can fit into these platforms, and want it to do everything. Then the contractor tries to get it to work, and fails, but the price goes up.

A prime example is the E-10A. The Air Force wanted a single platform that could replace the E-3B, E-8C, RC-135, and E-4B. Those are radically different platforms to be cramming into one airframe. They also couldn't integrate air and ground search radars into one platform. So then it became two platforms. Costs continued to climb, until it was canceled finally. Northrop didn't go to the Air Force, the Air Force came to them with the design parameters and let them figure out how to go about making it all work.

The company is going by the terms of the contract. If the contract says the government pays for overruns, then they pay. Civilian contracts are all about profits and minimizing costs. They don't have to pay the R&D and engineering costs because, at least for aircraft, there are going to be so many sold they'll be spread out over multiple companies. With a government contract, all the costs go to one place. And even with civilian contracts there are times the airlines do have to pay for issues with the aircraft they bought, even though they're new. Just not always to the extent that the government does.

originally posted by: Zaphod58
a reply to: scrounger

First, I never denied there were overruns. What I said is that they weren't to the extreme they got to as technology advanced. As equipment got more complex, the overruns got worse.

im sorry but "as equipemtn got more complex , the overruns got worse" is a piss poor excuse at best. first equipent ALWAYS gets more "complex" as time goes on. but that does not justify overruns. along with your argument falls flat because the SR 71 by any standard was a "complex" as it gets. but there was not the cost overruns you see today... nice try

Second, you keep bringing up the KC-46, which doesn't do anything for your argument, because it's fixed price. Boeing has already paid over $3B in overruns and fixes. The Air Force, meaning the taxpayer, is paying $55M for a boom redesign because they gave Boeing bad data.

first of all the KC 46 is not a "fixed price" because there is cost overruns . Along with you seem to forgot your initial response there is "always cost overruns".. so suddenly this particular piece of hardware defies all previous and post military projects? your kung fu deflection is weak. Along with maybe the boom was designed by "bad data" . but that defies logic given that boeing is supposed to do testing (we have computers now) and practical prototype that SHOULD have caught this instead of claiming it would work.. so at best your justifying a company not caring about their product working

Third, bringing up OBOGS on the F-35 is also probably not the best argument. OBOGS has been causing issues with the F-18, F-22, T-45, EA-18G, and F-35. It's a systemic problem, not aircraft specific problem.

sigh, Yes ANYTHING that is newer than the previous machine will have new challenges and problems. But what you gloss over is (in this case airforce) specs out a plane.. they want it to do A, B and C.. so the company makes a prototype and when the contract is signed it states what they are making will do A B and C for XX dollars. any "problems" should have been worked out BEFORE they sign a contract that states it will do as promised. not "we promised it but now there are problems"... sorry but if you say it will do what it claims and WE PAY YOU for it.. to claim "we have problems" thats on them. again not up to taxpayers to pay for a company not giving what was agreed to.

If you want to blame someone for "something spec out to the max and contract promise it will when it CLEARLY DOESNT", blame the service that wrote the contract. They write these contracts wanting everything they can fit into these platforms, and want it to do everything. Then the contractor tries to get it to work, and fails, but the price goes up.

im sorry but by your statement your blaming the service for asking for something that cannot be done (your words) . but IGNORE that the company SIGNED A CONTRACT THAT THEY CLAIM (btw ARE PAID) that it can be. if (as you claim) it CANT BE then the company SHOULD NOT SIGN A CONTRACT THAT SAYS IT CAN. Hell even kelly johnson sent back money and WOULD ADMIT if something could not be done. tell me if you asked for a car to do ABC, the company signed a contract that said it could be , YOU PAID FOR IT . Would you accept the blame and pay more? Bet to hell not (nor should you). but your free to require THE REST OF US to pay ? at this point I have to ask.. do you work for boeing or one of the other defense contractors?

A prime example is the E-10A. The Air Force wanted a single platform that could replace the E-3B, E-8C, RC-135, and E-4B. Those are radically different platforms to be cramming into one airframe. They also couldn't integrate air and ground search radars into one platform. So then it became two platforms. Costs continued to climb, until it was canceled finally. Northrop didn't go to the Air Force, the Air Force came to them with the design parameters and let them figure out how to go about making it all work.

um you seemed to leave out (deliberately it seems) a few steps.. the air force presents what they want (specs) on a new plane. they provide some "seed money" for studies to see if possible. the contractor then presents prototypes that are supposed to perform to those requirements. then the company PRESENTS A CONTRACT that CLAIMS THEY CAN MEET IT along with price. THEN the air force signs it and pays WITH UNDERSTANDING that the company will provide what they claimed at said price... if it cant be done the company at design / begining phase (if in real world) would say "cant be done" . again it may be in a contract or pushed (like sgt york) with more cash . something that should not be allowed. but in anycase the company when signs a contract AGREES IT CAN... sorry but your mental gymnatics trying to justify this is getting really desperate

The company is going by the terms of the contract.

um that I think on common sense shown that it isnt the case. Again why is there not a working (ex) f-35 in time frame you promised. the only LOGCIAL reason they dont is there is no penalty if they do not

If the contract says the government pays for overruns, then they pay.

on that I agree. but again my point is CALLING THIS OUT when in civilian world this is NOT (most of the time) happening/done.

Civilian contracts are all about profits and minimizing costs.

somehow military is not or not supposed to be? somehow a private jet (btw military does buy them) when you buy it for the military becomes anti "minimizing costs"? really? what reality are you in

They don't have to pay the R&D and engineering costs because, at least for aircraft, there are going to be so many sold they'll be spread out over multiple companies.

Continued

a reply to: Zaphod58

They write these contracts wanting everything they can fit into these platforms, and want it to do everything. Then the contractor tries to get it to work, and fails, but the price goes up.

er . . . No, in Fact NO contracts was how Skunk Works got started . . . and as the U-2 et al were All "black projects" (which came in on time, but "what budget"? You certainly won't find much of one which was The Deal to get the guy's at that company to work for them . . . I thought you'd know that Zaphod58 (who my non logged lurker likes, most of the time)

The Origin Story In 1943, the U.S. Army’s Air Tactical Service Command (ATSC) met with Lockheed Aircraft Corporation to express its dire need for a jet fighter to counter a rapidly growing German jet threat.

One month later, a young engineer by the name of Clarence "Kelly" L. Johnson and his team of young engineers hand delivered the XP-80 Shooting Star jet fighter proposal to the ATSC.

Quickly the go-ahead was given for Lockheed to start development on the United States' first jet fighter effort.

It was June of 1943 and this project marked the birth of what would become the Skunk Works® with Kelly Johnson at its helm. The formal contract for the XP-80 did not arrive at Lockheed until October 16, 1943; four months after work had already begun .

This would prove to be a common practice within the Skunk Works.

Many times a customer would come to the Skunk Works with a request,The formal contract for the XP-80 did not arrive at Lockheed until October 16, 1943; four months after work had already begun Kelly Johnson and his team designed and built the XP-80 in only 143 days, seven less than was required.

This would prove to be a common practice within the Skunk Works.

Many times a customer would come to the Skunk Works with a request, and on a handshake the project would begin, no contracts in place, no official submittal process. Kelly Johnson and his team designed and built the XP-80 in only 143 days, seven less than was required.

What allowed Kelly to operate the Skunk Works so effectively and efficiently was his unconventional organizational approach.
He broke the rules, challenging the current bureaucratic system that stifled innovation and hindered progress.

His philosophy is spelled out in his "14 rules and practices."

lockheedmartin.com..." target="_blank" class="postlink" rel="nofollow">The source of these words


No offence intended in any way, it's just I only watched a YT doco about it a few days ago

a reply to: Zaphod58

um that is complete horse crab apples... first in civilian world any (ex) aircraft the R and D is first paid for by the company to develope a plane the consumer would want. then the "r&d" is paid back by selling the plane.. the military is no different except the company gets money (maybe not totally) to develope an aircraft up front . then they make money (like the civilian) on sale of each unit.. along with an aircraft (staying with same example) is not made from top to bottom by one company in the civilian world either. sorry but that concept that your trying to claim is beyond desperation to point of BS.


With a government contract, all the costs go to one place. And even with civilian contracts there are times the airlines do have to pay for issues with the aircraft they bought, even though they're new. Just not always to the extent that the government does.

yes it is true .. mostly issues caused (as I also stated but you seem to forget) by changes the airlines made to the plane... not that the plane was delivered to them defective or not working as contracted.. that (as with say someones car) is RESPONCIBLITY of the company to fix.. at their cost.. again if I buy a car that the transmission is faulty.. they PAY TO FIX IT, not me.. if I choose to request (ex) a different engine than one previously agreed/paid for.. then I have to eat the difference. but notice the little comment you made "just not always to the extent that the government does".. so same problem as civilians, but we pay more and unlike the airline we pay directly. wonder why you so ok and in fact supporting this? hmmmm



You must work for or related in some way to a defense contractor for you not only to try to justify this by any and all means.

but to go so far as to blame "the taxpayer" for this

last I checked the "taxpayer" has been calling this out for DECADES and in fact last I checked no taxpayer has had the right to directly control this.

I will say there is those that fight to keep the status quo and/or specific programs . Ironically those that work for the very companies that make whatever hardware/software .

that is understandable.

but to keep claiming and alot of the time JUSTIFYING the difference between a company buying a plane (ex) and the military doing (and at times the same plane) it under a different system that defies all logic
along with defies all basic economics, contract law, ect.

that is just sad.

the truth is the military buying system is flawed and if it were civilian unjustifiable.

it is time (and reason for my OP btw) to STOP MAKING EXCUSES AND JUSTIFYING IT...

we the taxpayer cant afford it and our men/women in the military deserve better.

scrounger

a reply to: JohnnyJetson

thank you for pointing out kelly johnson and skunk works.

the only reason a contract was not initially needed was kelly (a rarity back then and today non existent) was an HONEST MAN

he put a quality product and integrity ahead of anything else

if he could not do it, he didnt claim he would

if he was under budget, it went back to the customer in upgrades (if he could not give it back)

if the project was clearly a stinker, he returned the unused cash.


hell even ben richards (father of the f-117 and successor to kelly) kept that integrity in doing business.


today the contractors (with their allies aka future employees in the military and government) dont care (as a majority).


scrounger

a reply to: scrounger

thanks and I agree completely with your comment . . . he was one of the OG's (like Trump) who's "word" = Everything!

which is why wikileas has NOTHING on him - - he's actually a pretty cool guy, who doesn't mind saying "opps I FU, MY bad et" and then 'get On with it'

His team of advisors are superb too

not to mention aaaaa Q!

a reply to: scrounger

Sweet Jesus, could you have made this any harder to read?

You have so many flaws in your logic it's not funny. Go back and look through history. As equipment gets more complex, and does more, guess what happens. That's right, the price goes up. And no, it doesn't justify overruns, but you're talking complexity levels never imagined even 30 years ago. The F-35 requires 18 million lines of code, and does things that are insane compared to the F-15, which was the last time air combat changed this radically.

You have no idea how contracts work apparently. Fixed price doesn't mean "no overruns". Fixed price means that the government pays the price of the contract, plus a small percentage of overrun. In the case of the KC-46, it was something like 3% above the agreed upon cost. Everything after 3% is paid by Boeing out of their pocket. It's not passed on, like in cost plus. As for the boom, how do you think they found out that the Air Force gave them bad data? During TESTING and certification with different aircraft they found out that the boom was too stiff for the A-10. Because the Air Force gave them bad data for the required stiffness.

Of course the service deserves blame. Have you ever actually looked at how this works? Yes, the company signs a contract, but in most cases, in addition to wanting everything but the kitchen sink, they frequently change the requirements as the process goes on. That also drives prices up because it requires more engineering. You seem to only want to blame the company and think the service does no wrong.

So, you're telling me that if the government came to your company, and said they were offering you a contract for somewhere around $300B, and gave you the specs and $100M, you'd look at it, and say, "Sorry, can't be done, but thanks for the $100M"? I call BS.

You should look at civilian bookkeeping some day if you like what the military does. They lose money for years on new aircraft to keep from passing on costs. They can get away with that with the airlines, because the airlines have other options. The military has effectively two producers for fighters, and three for larger aircraft. And it's just as bad in other areas.

No, it's not about minimizing costs for the military, because they know the military doesn't have options. They pay lip service to minimizing costs, but if you're an airline looking for a short or medium range aircraft, you have at least five or six choices. If you're the US military looking for a fighter, you have two. There are others who always bid, but none of them realistically have a chance, so it's going to be Boeing or Lockheed. And now the military is handing out contracts to keep production lines open, because they're threatening to close down, and reduce the production base even more.

a reply to: JohnnyJetson

You're comparing ONE division of one company, and a very small number of contracts 60+ years ago to now. It hasn't worked that way since the U-2 and F-104 were born, and probably never will again.

a reply to: scrounger

It's not the same for the airlines when paying R&D costs. The government pays all the costs for engineering. Each airline pays a small portion of those costs. They're spread out a lot more with the airlines. If 50 airlines buy 787s, the engineering costs are spread out over 50 airlines. One "airline" is currently buying the KC-46 so is paying all the engineering costs.

By and large a big part of overruns ARE caused by the government changing things as they go.

Oh yes, I dare to have a differing view of things so of COURSE I have to be a shill for someone. That is such a bull# claim. And I have never once blamed the taxpayer, so you can climb down off that horse. The government, hell yes, because I've watched them screw procurement for far too many years. The contractor, absolutely. The taxpayer doesn't have jack # to do with the process, so why the hell would I blame them.

a reply to: scrounger

And you know what? They didn't then either. Johnson was the exception, not the rule. Otherwise the process wouldn't have broken like it did.

originally posted by: Zaphod58
a reply to: JohnnyJetson

You're comparing ONE division of one company, and a very small number of contracts 60+ years ago to now. It hasn't worked that way since the U-2 and F-104 were born, and probably never will again.

No, I'm discussing ONE 'original' event which began a long and fruitful relationship most of us haven't a clue about!

Can you tell me about the Skunkworks projects John Lear taked about when saying "we have the tech to take ET home!?"

No, and I said and I quote myself;

No, in Fact NO contracts was how Skunk Works got started . . . and as the U-2 et al were All "black projects" (which came in on time, but "what budget"? You certainly won't find much of one which was The Deal to get the guy's at that company to work for them

Implying that If 70 years ago, work with what would become known as Lockheed's "skunkworks" was initiated with a handshake

And that as well as being a "Black Budget" project, as were a large percentage of SW's later "contracts", not you or I could make such a statement as you did OR know whether it was a "very small number". You're changing the topic I raised and trying to refute that, which is known as a logical fallacy, specifically a 'straw man'

Bro, you made a mistake which I only picked up as I watched a show about it a few days earlier . . . otherwise I know SFA about such matters. And I thought it was "good practice" to bring such a mistake into the light. Just say "oops" and all's good.


that's what I was saying . . . c'mon bro, get off the pedestal quit with the strawmen just to try and make yourself "right", you were "mistaken" , eh, nbd

a reply to: JohnnyJetson

Handshake agreements today don't happen. Whether it's black or white, the CEO and board are under too much scrutiny, and the costs too high. The actual development of an aircraft, if you go farther than the design process, can run hundreds of millions or into the billions, depending on the type. What actually happened with the XP-80 is slightly different than you think though. The work that was done before any part of the contract was signed was design work, on paper. No part of the aircraft was actually built.

It's not uncommon for some design work to be done before the contract is done. Companies frequently know well ahead if a new RFI/RFP is coming. New aircraft aren't built or developed to a flying prototype without a contract in the works without a good reason. Kelly Johnson was an oddity in the industry, and his type hasn't been seen since. The XP-80 wasn't actually built until after the LOI was delivered. Skunk Works was created after the LOI for the XP-80, when he blocked off the construction line to hide what they were building. Actual work on the physical aircraft doesn't start before the contract process is started. The LOI started the process.

Lockheed built the Polecat with their own money to demonstrate a new rapid prototyping system, as well as the ability to use off the shelf components and new construction processes, but it wouldn't have been more than a technology demonstrator and advertising for them. It's endurance was too short for more than that. Companies now will start sensor development, software work, and the actual design process before the LOI or contract, but most of that doesn't start until about the time the RFI is released.

Seventy years ago you could go pretty far into the process, and if you were Kelly Johnson, walk into the Pentagon and say, "You have a hole in your capabilities, I can build you this to fill it". That's basically what happened with the XP-80. His team designed it, and when the AAF was visiting, he handed them the design. They sent the LOI that afternoon, which basically allocated the money to build the physical aircraft. After they built the first and demonstrated it, the full contract was signed.

I'd be happy to admit if I was wrong. But things aren't quite how you thought, or possibly as they were portrayed in the documentary you watched.

The people that really pay the price are those who've
lost their life in a Blackhawk helicopter crash. The
worse piece of Military hardware in the history of
the world.

a reply to: MrBlaq

I never had to fly on them, but thought it was really neat that the -60A couldn't even fly near transmission towers without them causing interference with their flight controls and systems.

Don’t forget this is a big business and as Zaph pointed out not many players.

If you want the most cutting edge aircraft in the world you pay for them.

Which company in their right mind would risk going under accepting contracts for unproven technologies.

Why would a $10 fastener company accept the risk of one of its fasteners causing a $50m fine when they only made $5m profit?

If the government (and taxpayer) didn’t pay, you wouldn’t have an aircraft manufacturer in the US or anywhere in the world.

You are naive in the way of business.