Half of U.S. Defense Budget Has Gone to Private Contractors Since 9/11

Started by Shiranu, September 26, 2021, 11:34:00 PM

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Shiranu

https://www.pbs.org/newshour/politics/study-says-nearly-half-of-defense-spending-for-9-11-wars-went-to-private-contractors


Cui bono, cui bono?

"War is a racket. It always has been. It is possibly the oldest, easily the most profitable, surely the most vicious. It is the only one international in scope. It is the only one in which the profits are reckoned in dollars and the losses in lives." - Major General Smedley D. Butler



QuoteUp to half of the $14 trillion spent by the Pentagon since 9/11 went to for-profit defense contractors, a study released Monday found. While much of this money went to weapons suppliers, the research is the latest to point to the dependence on contractors for war-zone duties as contributing to mission failures in Afghanistan in particular.

In the post-9/11 wars, U.S. corporations contracted by the Defense Department not only handled war-zone logistics like running fuel convoys and staffing chow lines but performed mission-crucial work like training and equipping Afghan security forces â€" security forces that collapsed last month as the Taliban swept the country.

Within weeks, and before the U.S. military had even completed its withdrawal from Afghanistan, the Taliban easily routed an Afghan government and military that Americans had spent 20 years and billions of dollars to stand up. President Joe Biden placed blame squarely on the Afghans themselves. “We gave them every chance,” he said last month. “What we could not provide them was the will to fight.”

But William Hartung, the author of Monday’s study by Brown University’s Costs of War project and the Center for International Policy, and others say it’s essential that Americans examine what role the reliance on private contractors played in the post-9/11 wars. In Afghanistan, that included contractors allegedly paying protection money to warlords and the Taliban themselves, and the Defense Department insisting on equipping the Afghan air force with complex Blackhawk helicopters and other aircraft that few but U.S. contractors knew how to maintain.

“If it were only the money, that would be outrageous enough,” Hartung, the director of the arms and security program at the Center for International Policy, said of instances where the Pentagon’s reliance on contractors backfired. “But the fact it undermined the mission and put troops at risk is even more outrageous.”
Every day is a good day to *remove from server* an autocrat.

Jason Harvestdancer

Meanwhile the US government could cut the defense budget in half and still have the biggest defense budget in the world.
White privilege is being a lifelong racist, then being sent to the White House twice because your running mate is a minority.

No Biden, no KKK, no Fascist USA!

Gawdzilla Sama

None of the few million rounds I fired in my twenty years were made by the military. The warships were built by privately owned shipyards. The Navy's farms undersupplied us with food and we had to on the market to get more.

We 'new atheists' have a reputation for being militant, but make no mistake  we didn't start this war. If you want to place blame put it on the the religious zealots who have been poisoning the minds of the  young for a long long time."
PZ Myers

drunkenshoe

Quote from: Jason Harvestdancer on November 14, 2021, 07:53:32 PM
Meanwhile the US government could cut the defense budget in half and still have the biggest defense budget in the world.

Is this correct? *Whistle...
"I believe you find life such a problem because you think there are good people and bad people. You're wrong, of course. There are, always and only, the bad people, but some of them are on opposite sides." Havelock Vetinari

GodFree

I think Smedly forgot to include religion. I think his definition would apply as well.
Life-long atheist, (freethinker, agnostic, never believed also apply)

FreethinkingSceptic

Quote from: Shiranu on September 26, 2021, 11:34:00 PM
https://www.pbs.org/newshour/politics/study-says-nearly-half-of-defense-spending-for-9-11-wars-went-to-private-contractors


Cui bono, cui bono?

"War is a racket. It always has been. It is possibly the oldest, easily the most profitable, surely the most vicious. It is the only one international in scope. It is the only one in which the profits are reckoned in dollars and the losses in lives." - Major General Smedley D. Butler
What's the problem with private contractors? A lot US military hardware is designed and funded by private companies even if it's considered part of the "public" military.

So if this is just based on the false "public/private" or "non-profit/for-profit" dichtomy and some ignorant assumptions made thereof, it isn't saying much at all, since those are just flimsy and arbitary legal definitions which don't mean anything or work that way in the real world.

Shiranu

QuoteWhat's the problem with private contractors?

The fact that they charge 10-times what the product is worth and that the government spends our money on it without our consent.

QuoteA lot US military hardware is designed and funded by private companies even if it's considered part of the "public" military.

A lot of our military hardware is also dogshit and out-of-date by the time the companies even get it off the assembly line (5-10 years after we expected to get it).

QuoteSo if this is just based on the false "public/private" or "non-profit/for-profit" dichtomy and some ignorant assumptions made thereof, it isn't saying much at all, since those are just flimsy and arbitary legal definitions which don't mean anything or work that way in the real world.

It's not, as I think it should be private industry; I just think that private industry that we employee is absolute dog-water (and I say that from second-hand experience as well as from news articles, with family working both gov't and military) and a waste of money.
Every day is a good day to *remove from server* an autocrat.

Gawdzilla Sama

We 'new atheists' have a reputation for being militant, but make no mistake  we didn't start this war. If you want to place blame put it on the the religious zealots who have been poisoning the minds of the  young for a long long time."
PZ Myers

PopeyesPappy

Shir, you don't have clue how government contracting works. While there are always exceptions to every rule, nobody and I mean nobody gets paid ten times what something is worth by the government. Everything, and I mean everything the government buys from pencil leads to nuclear carriers the cost is determined by a cost schedule. This cost schedule consists of actual materials and labor, fringe, overhead, G&A and/or material handling, and fee. The only place a contractor is allowed to actually make a profit in that cost schedule is in the fee, and there isn't a contracting officer on the planet that will buy something for the government with a 1000% (10 times what it is worth) fee.

A cost schedule is made up of cost pools that consist of direct and indirect costs.

Direct costs include what you actually pay for materials and labor. For an engineer getting paid a base salary of $120,000 charging to a government contract that might look something like this:

Base Salary       $105,706.40
Fringe   36.04%    $38,093.60
Overhead   17.00%    $17,970.09

Please note that the base salary is less than the $120,000 you actually pay the engineer. That is because it only includes time for actual hours worked on contract. In the case it is 2080 minus 120 hours vacation minus 88 holiday hours minus 40 sick time hours = 1832 working hours. So you get $120,000 divided by 2080 (pay hours) = $57.70 an hour times 1832 (chargeable hours) = $105,706.40 total base cost.

Next comes fringe. This includes time off, health insurance, 401K contributions, bonuses, company paid payroll taxes, and any/all other benefits the employee receives. In this case the company pays $750 a month for insurance, $1,000 a month in taxes, 4% in 401K matching or $400 a month, a 7.5% bonus of $9,000, and $14,293.60 for paid time off. $38,093.60 a year.

Plus you have overhead. This includes rent and utilities for the employees office space, their share of common spaces such as conference rooms and rest rooms, the tools they use to perform their job such as computers and software, and any insurance required for those spaces. $17,970.09 a year.

Total direct cost to the government for a $120,000 a year employee with the above rates is $161.770.09 a year.

Then come indirect rates including G&A and material handling. G&A includes pretty much everything it takes to operate a company minus direct costs. HR, accounting, business development, contracts, purchasing, legal, senior management, the receptionist, and anybody else the company employees that supports a contract, but does not charge directly to it. It includes their fringe, their overhead, their G&A. It also includes required professional licensing, training, audits by outside accountants and IT security specialists. G&A in this case 19% or $30,736.32 a year. Actually a fairly reasonable rate, and one you would only see in smaller companies. The big boys would chare a lot more because their costs are higher. But then they have capabilities that most smaller companies don’t have.

Material handling is similar to G&A, but it is only applied to sub-contractor fees and materials not labor. It is usually a lower rate than G&A because it usually costs less to buy things than to employ people. Companies that are labor heavy usually don’t charge material handling. They just roll the cost of purchasing materials into the G&A rate. Companies that are materials heavy usually do.

This puts us here for our engineer.

Base Salary       $  105,706.40
Fringe   36.04%    $    38,093.60
Overhead   17.00%    $    17,970.09
G&A   19.00%    $    30,736.32
Total   182.11%    $  192,506.40

Those are expenses. 1.8 times base salary to provide a body for the government. The company did not make one dime on any of that. They paid it all back out either to or in support of the employee. You can’t just mark something up so you will make a little bit extra somewhere either. The government audits these costs. If you get audited and you spend less than your estimated cost you have to pay it back.

The only thing left is fee. A company can ask for any fee they want, but contracting officers don’t like to pay 10% much less 100%, and the only time you are going to see high fees is when you are looking at a product or service that can’t be purchased elsewhere, or a fixed price contract where the risk to the contractor are know to be high. So add a 10% fee to our engineer it’s another $19,250.64. That puts us at more than twice the base cost.

Base Salary       $105,706.40
Fringe   36.04%    $38,093.60
Overhead   17.00%    $17,970.09
G&A   19.00%    $30,736.32
Fee   10.00%    $19,250.64
Total   200.33%    $211,757.05

Fee is everything the company makes as profit, and all unaccounted for expenses have to come out of that. Things like unexpected overtime because somebody doesn’t show up and a their position has to be covered by someone else. Or you expected to pay $1600 a year for a seat of AutoCAD and the jack the price up to $2000. That comes straight out of your fee on most of the contracts the government issues these days.

I’m running out of time here but I’ll try to add some stuff later on how the government helps drive these costs up with compliance requirements, types of contracts and when they are used, and the exceptions to the nobody rule.
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Gawdzilla Sama

We 'new atheists' have a reputation for being militant, but make no mistake  we didn't start this war. If you want to place blame put it on the the religious zealots who have been poisoning the minds of the  young for a long long time."
PZ Myers

Shiranu

QuoteShir, you don't have clue how government contracting works. While there are always exceptions to every rule, nobody and I mean nobody gets paid ten times what something is worth by the government.

-Future Combat Systems (FCS), started in 2009 and abandoned in 2016; Total cost to taxpayers - $18 billion.[1]

-RAH-66 Comanche helicopter, started in 91' and cancelled in 2004 after only two prototypes were built; Total cost to taxpayers - $6.9 billion.[2]

-The XM2001 Crusader Artillery, cancelled in 2002 by Rumsfield for being too heavy and not what the military needed; total cost - $11 billion.[3]

-The three attempts (at time of article) to replace the Bradley Fighting Vehicle, rejecting all 3 for not being what we need but continuing the same request; total cost to the taxpayer - $22.3 billion. [4]

-The Ground-based Midcourse System, a project in the works since 1999 and a branch of Regan's notorious "Star Wars" waste, used to stop incoming missiles but having a less than 60% success rate on mock missiles significantly less complex than we would actually expect to see in a nuclear launch; cost to taxpayer - $67 billion. [5]


-The F-35 Fighter program, constantly plagued by technical issues (over 900 software defects so far) and flaws and spending more time being repaired than seeing service; estimated cost to taxpayers - $1.5 trillion dollars. [6]

-The Zumwalt Destroyer, that has had to have it's role changed as most of the systems didn't work and those that did were massively over-priced, leading to them downgrading after 2 ships; program cost to taxpayers - $22 billion dollars. [7]

- The Littoral Combat Ship (LCS) that my family has both assembled and served on, commissioned 17 years ago and costing 250% more a ship than originally agreed upon despite the fact that the Navy does not deem them ready for service due to constant technical malfunctions... but don't worry, Congress has decided to cut funding for anti-submarine and mine modules so they are even less suited for their job. Cost to taxpayers: $30 billion dollars. [8]







Get the fuck out of here with that, "nobody gets paid ten times what something is worth"... if anything 10 times was far too kind, we are paying about 30 billion times, 67 billion times, 1.5 trillion times what this garbage is worth, and the list could keep on going but I don't have the patience to spend another 5-10 hours listing overpriced garbage the Pentagon has wasted our money on.

[1] - https://www.defensenews.com/30th-annivesary/2016/10/25/30-years-future-combat-systems-acquisition-gone-wrong/
[2] - https://nation.time.com/2012/05/25/real-lessons-from-an-unreal-helicopter/
[3] - https://web.archive.org/web/20040225164714/https://www.senate.gov/~armed_services/statemnt/2002/May/Rumsfeld.pdf
[4] - https://www.nbcnews.com/think/opinion/army-decided-replace-bradley-fighting-vehicles-17-years-22b-ago-ncna1136141
[5] - https://blog.ucsusa.org/elliott-negin/missile-defense-risks/
[6] - https://www.nytimes.com/2019/08/21/magazine/f35-joint-strike-fighter-program.html
[7] - https://nationalinterest.org/blog/reboot/after-sinking-billions-its-stealth-destroyers-navy-needs-more-money-keep-them-afloat
[8] - https://www.nbcnews.com/think/opinion/navy-spent-30b-16-years-fight-iran-littoral-combat-ship-ncna1031806
Every day is a good day to *remove from server* an autocrat.

PopeyesPappy

Quote from: Gawdzilla Sama on December 20, 2021, 08:44:23 AM
Could you post the long version of that?
Well that was the short version so yes, but it is going to take me awhile.
Save a life. Adopt a Greyhound.


PopeyesPappy

Quote from: Shiranu on December 20, 2021, 09:35:10 AM
-Future Combat Systems (FCS), started in 2009 and abandoned in 2016; Total cost to taxpayers - $18 billion.[1]

-RAH-66 Comanche helicopter, started in 91' and cancelled in 2004 after only two prototypes were built; Total cost to taxpayers - $6.9 billion.[2]

-The XM2001 Crusader Artillery, cancelled in 2002 by Rumsfield for being too heavy and not what the military needed; total cost - $11 billion.[3]

-The three attempts (at time of article) to replace the Bradley Fighting Vehicle, rejecting all 3 for not being what we need but continuing the same request; total cost to the taxpayer - $22.3 billion. [4]

-The Ground-based Midcourse System, a project in the works since 1999 and a branch of Regan's notorious "Star Wars" waste, used to stop incoming missiles but having a less than 60% success rate on mock missiles significantly less complex than we would actually expect to see in a nuclear launch; cost to taxpayer - $67 billion. [5]


-The F-35 Fighter program, constantly plagued by technical issues (over 900 software defects so far) and flaws and spending more time being repaired than seeing service; estimated cost to taxpayers - $1.5 trillion dollars. [6]

-The Zumwalt Destroyer, that has had to have it's role changed as most of the systems didn't work and those that did were massively over-priced, leading to them downgrading after 2 ships; program cost to taxpayers - $22 billion dollars. [7]

- The Littoral Combat Ship (LCS) that my family has both assembled and served on, commissioned 17 years ago and costing 250% more a ship than originally agreed upon despite the fact that the Navy does not deem them ready for service due to constant technical malfunctions... but don't worry, Congress has decided to cut funding for anti-submarine and mine modules so they are even less suited for their job. Cost to taxpayers: $30 billion dollars. [8]







Get the fuck out of here with that, "nobody gets paid ten times what something is worth"... if anything 10 times was far too kind, we are paying about 30 billion times, 67 billion times, 1.5 trillion times what this garbage is worth, and the list could keep on going but I don't have the patience to spend another 5-10 hours listing overpriced garbage the Pentagon has wasted our money on.

[1] - https://www.defensenews.com/30th-annivesary/2016/10/25/30-years-future-combat-systems-acquisition-gone-wrong/
[2] - https://nation.time.com/2012/05/25/real-lessons-from-an-unreal-helicopter/
[3] - https://web.archive.org/web/20040225164714/https://www.senate.gov/~armed_services/statemnt/2002/May/Rumsfeld.pdf
[4] - https://www.nbcnews.com/think/opinion/army-decided-replace-bradley-fighting-vehicles-17-years-22b-ago-ncna1136141
[5] - https://blog.ucsusa.org/elliott-negin/missile-defense-risks/
[6] - https://www.nytimes.com/2019/08/21/magazine/f35-joint-strike-fighter-program.html
[7] - https://nationalinterest.org/blog/reboot/after-sinking-billions-its-stealth-destroyers-navy-needs-more-money-keep-them-afloat
[8] - https://www.nbcnews.com/think/opinion/navy-spent-30b-16-years-fight-iran-littoral-combat-ship-ncna1031806

Shir, we probably don't have a common definition of what something is worth here. From a supplier perspective value is objective. It doesn't matter if the buyer is the government or some person on the street. Goods and services are worth everything it costs to supply them plus profit. From your perspective value is subjective. Goods and services are worth what you think they are.

Everything on your list are contracts to develop new technology. i.e. technology that did not exist until the government asked someone to invent it. There are no guarantees when you are doing something like that. Never has been and never will be. It isn't a new problem either. Have you ever seen the movie The Aviator? If so, do you remember the part where he was testifying before congress about the millions of dollars paid to Hughes Aircraft for a plane that never flew? Remember the list of contracts Hughes responded with. multiple contracts for planes tanks and what not the government paid to have developed that never reached production for whatever reason. These contracts didn't represent fraud on the contractor's part. They represent a point when the government decided they weren't worth funding any more and elected to cancel the contracts.

Let's take the F-35 as an example. Everyone knew from the start the F-35 was a pipe dream that was going to be hard to make a reality. The $1.5 trillion (actually $1.6) price tag you mention includes a lot more than just buying the aircraft. It the total estimated price for operating and maintaining the fleet including upgrades that haven't even been defined yet through the year 2070. That's 50 years from now. Final per unit production price of around $80 per unit is actually less than that of some the last generation aircraft the F-35 will be replacing.

Original production cost was estimated at $200 billion. By 2017 that number had grown to over $400 billion. Much of that increase was driven not by contractor failures but by ever changing requirements. For example the government asked for the weapons bay to be enlarged. This meant that things had to be moved around. The plane got bigger. That added weight. This affected performance so the engine had to be redesigned for more thrust. A redesign to save weight was undertaken which added 6.2 billion to the final cost. This was just one example of hundreds where cost and schedule overruns were the product of government requested changes. Not misconduct by the contractor.

Is the F-35 worth what we paid for it? The men and women who fly it think so. That short article is probably worth a couple of minutes of your time to read as it might change some of the subjective values you use to judge the F-35 and similar systems.

Save a life. Adopt a Greyhound.