Boeing allegedly overcharged the military 8,000% for airplane soap dispensers
The government also isn’t sure if it paid 'fair or reasonable' prices for another 25 spare part orders.
You didn't think they actually spent ten thousand dollars for a hammer and thirty thousand for a toilet seat, did you?
soap dispensers
Sounds like money laundering was going on.
Why? It's common knowledge you can easily ask 300% of your default price if it's the government. And soap dispensers are kind of needed. Nowadays companies often buy the non-touchy expensive ones. So it isn't really too weird.
It’s common knowledge you can easily ask 300% of your default price if it’s the government.
primarily because government requirements are often way more strict than standard commercial or consumer... If someone sets up a contract with you that requires you do 100 things you normally don't do... you're going to charge more. 3x is likely fair in most cases where compliance becomes a thing just for the cost of talking to counsel about meeting those requirements.
You ever see the video of the snap on socket being sold for 50k?
This is a regular occurrence in the MIC, it only comes up when you fail to deliver on something and the Pentagon actually decides to open an investigation.
For its part, Boeing representatives announced they are “reviewing the report, which appears to be based on an inapt comparison of the prices paid for parts that meet aircraft and contract specifications and designs versus basic commercial items that would not be qualified or approved for use on the C-17,” the company said in a statement.
looks dubiously at dispenser
In what way is the right-hand soap dispenser not adequately qualified?
EDIT: It looks like the C-17 can fly pressurized, so I don't think that it can be undergoing pressure changes, which is the one thing that I could think of.
The COTS unit shown there is not tested and certified to the contract requirements Boeing was working to. Simple as. If the price ridiculous? Absolutely yes. But you cannot go to a home hardware store and slap one in a plane.
I'm 90% sure these deals are a way to funnel money into defense contractors without having a suspicious paper trail.
Overcharge a bit here and there, and by sheer volume you get a nice shadow budget to build and operate things that aren't even supposed to exist.
Welcome to the MIC. Have a gold star and a bunch of war crimes that would make Satan question his existence.
The cabin is usually pressurized to the equivalent of 8000 ft asl. So the dispenser does have to deal with pressure changes. A simple vent hole aught to take care of that though.
Isn’t that what the military is for? The rich need a public institution that simply pays them what they want.
War is a racket
Great quote. Better book. Written by "A True American Hero."
Stories like this are sometimes more complicated than they appear. The infamous examples of $500 hammers, for example, were anti sparking hammers for working around flammables or munitions, hence requiring special materials, certification, and low production runs.
For this case, we have liquid hand soap dispensed by a pump. Pumps require a sealed vessel. Unlike commercial planes, military planes are required to anticipate prolonged operation with an unpressurized cabin. At max altitude of a C17, atmospheric pressure is only 20% of sea level. Off the shelf dispensers are unlikely to be designed to withstand that pressure difference, let alone function normally. In a high demand environment like aerospace, even apparently minor failures like an exploding soap container needs to be taken seriously due to the possibility of unexpected cascading failures. Why not use bar soap, then? Unfortunately this too has complications, like not being able to be securely mounted, liquid soaps having superior hygiene and cross contamination characteristics, and necessity for military standardized soap, sometimes designed for heavy metal, eg lead, which is likely if the cargo were munitions.
This unusual set of requirements unlikely to be seen outside the military context, so whether designed by Boeing or off the shelf the unit would likely have low quantity manufacturing runs, significantly increasing per unit costs. Combine that with the necessary certifications and the per unit costs balloon even further.
While a soap dispenser having an 80x markup seems absurd, it might be more reasonable than it seems at first glance. To be clear, there absolutely is military contractor graft. I just don't expect even a $10,000 soap dispenser would be a substantial proportion if it even within the C17.
You take all those factors THEN double the cost. Government contracting in a nutshell.
Your standard one-way-valve/flexible-tube dispenser, for example, would leak quite horribly at altitude (or burst), neither of which is desirable.
Let's not also forget the fleet of passenger aircraft for distinguished persons, maintained by the military, with everything custom made and embroidered with presidential seals and produced in the USA and run through vigorous inspection to prevent microphone or pagers or something inside your soap dispenser.
The infamous examples of $500 hammers, for example, were anti sparking hammers for working around flammables or munitions, hence requiring special materials, certification, and low production runs.
https://en.wikipedia.org/wiki/Packard_Commission
I'm not one to praise Reagan, but the Packard Commission picked off some incredibly low hanging fruit. The $435 hammer ($1235 adjusted for inflation) was a boondoggle by any standard. That it was overcharged by a factor of 2-3x instead of the sloppy journalism implying a 100x markup doesn't refute the fact that these contracts were corrupt on their face.
While a soap dispenser having an 80x markup seems absurd, it might be more reasonable than it seems at first glance.
Either the equipment could be purchased wholesale much cheaper (as was often the case even for industrial grade goods) or the production should have been insourced to the department that had a bespoke demand.
The fact that Boeing exists at all is absurd, given the degree to which government monopsony and security concerns force them to act as a department within the public sector. But the extortionary rates illustrate the fraud that is the reason these public-private relationships exist.
Boeing keeps stepping on the rake.
I mean, wouldn't you if the rake handle had huge bags of cash tied to it? They'll always step on the rake but they're practiced enough that they only get hit in the face occasionally.
It's almost as if another company with interests in a different but similar field that's run by a fucking psychopath is trying to get rid of the competition
Soap dispensers in general are a fucking racket. They're like 50$ a refill
Cool I'm so glad I got wildly overpriced soap dispensers on planes I'll never board for the fucking huge chunk of cash our useless fucking government takes from me instead of healthcare, or roads that aren't full of potholes, or properly functioning public transit, I love this country and my life
And why exactly did they pay it?
It's often the military's own flowed down certification requirements that result in significantly higher costs
Yeah. The expensive soap dispenser probably had to pass shock and vibration testing, thermal stress testing, and explosive atmosphere testing... Because that was in the requirements.
I work in this space. There's a wide variety of reasons, a company being dumb and greedy is definitely among them but typically just a tiny part of the equation. The biggest thing is certified vendors. The military/government is incredibly strict with who they'll contract with. Which means the supply is incredibly limited on many things, which in turn means that companies will ratchet up prices a crazy amount in part to deal with the goofy standards that the government requires on their goods but also because they know the demand far outweighs the supply.
There is also the burden of time. The US government drags their feet an INSANE amount on projects. It scales with size as well. The larger the project the slower things move almost every time. It very frequently gets to a point where they need stuff done right now because they waited too long and will pay pretty much any price to do it.
There is also the fact that the military is operating with a budget chalk full of "fuck you money." In short, money is immaterial. Half the time they don't even look at the price, whatever it costs doesn't matter, just get it done and get it done right.
My company marks up shit an insane amount and I know for a fact pretty much every other certified vendor is as well. I dunno about 8k% (lol) markup but honestly that doesn't shock me. The prices I've seen are jaw dropping. And they pretty much never get negotiated or rejected.
Probably because trying to fight the bullshit ends up costing more in the long run.
I mean... Just don't pay and get planes from Airbus next time...
This isn’t oniony. It happens all the time. The ongoing theory is that it’s done to cover top secret expenditures.
It's much more likely to be corporate kickbacks for political donations.
I would say kinda based if it wasn't my tax dollars going toward that crap. Starts to put the massively over-inflated military budget into perspective.
This is exactly what happens when the system is based on lowest bid contracts.
I know “everybody does it” isn’t a valid excuse, but… everybody does it.
Does it come with free refills for life or something?
