Boeing overcharged the U.S. Air Force 8,000% above market for soap dispensers
Comments
oivey
rullelito
> Why does it have to be somehow the government’s fault
Because they bought it.
> They’re so unable to control costs
I assume you talk about the government here?
oivey
> Because they bought it.
Fair enough, but I was referencing people taking a Boeing exec’s claim that somehow regulations cause military soap dispensers to cost that much at face value.
> I assume you talk about the government here?
No. Read the whole sentence. I’m referencing Boeing and the tens of billions Boeing has lost on fixed price contracts.
pydry
It's strange how much some people are assuming this is as a result of a mistake or incompetence instead of simple corruption.
"Whoops I made $600 from something that cost me $10"
oivey
True. That’s really a bridge too far for people who believe a Boeing executive who says tactical soap dispensers really do cost $700.
SlightlyLeftPad
The international man of mystery would like a word. Those tactical soap dispensers can be a great defense against tactical shoes. Can’t put a price on that.
cjensen
The US has 222 C-17 Aircraft. A single C-17 costs over $300 million.
If you ask Boeing for soap dispenser parts for these, what should they cost? Boeing charged $149,072 for the dispensers. That's $671 per plane. Is that too much?
If you had to make these dispensers, make sure they conform to rules for aircraft parts and Air Force parts, provide formal responses to bids, etc., how much could you make them for?
It seems high to me. The article says 8000%, which is less than $10 per plane. So while it seems high, it's definitely not 8000% high.
bagels
Can you imagine even being a one-man shop making 222 bespoke soap dispensers to some absurd spec AND jumping through all the documentation hoops that are required for only $150k? I wouldn't take that job. Sounds awful.
dmurray
Sounds interesting!
The first year you learn how hard it is, you spend 80% of your time on compliance documentation and 80% of your budget on tooling. You still don't have a satisfactory product or a mastery of filling out the forms. It drags on into the second year, you're living on ramen but eventually deliver it (if there's one thing the government procurement process is tolerant of, it's delays) and get paid.
The third year you take on a additional contract, for 200 toilet flushes or whatever. New manufacturing challenges, but at least you're getting the paperwork down.
After a few more jobs, you've cracked it. You start bidding for all the military's bathroom-related contracts. At five or six contracts a year, you have a million or two rolling in (and low manufacturing costs - remember, the spec is such that you can produce it for 80x lower) and you've hired five employees.
By year five, the only thing you care about improving is sales. You still have 5 machine shop staff, paid well but not enough to make them wealthy. You focus on hiring ex-military brass and making them sales reps and lobbyists. You're into tens of millions of revenue, that is, profit.
Year 8, you sell the thing to Northrop or to a private equity firm and go retire on an island.
mjevans
I wonder what's special enough for this to be different from certified aviation grade equipment? It'd be nice it they could either make a bunch of a design (usefully) for the military to fulfill mil-spec, or if they could take an existing design and just make it in a mil-spec compliant way.
wmf
You also need to provide exact replacement parts for 50 years so you should probably make 666 of them just to be safe.
cenamus
But you also get paid for those
JohnBooty
Yeah. People who haven't done manufacturing may laugh, but depending on how many custom parts there are you could easily spend most or all of that $150K just on the molds/tooling.
Now, like you said... the root cause here is probably some absurd spec that prevents them from using some existing commercial soap dispenser whose costs have already been amortized.
Then again, maybe the spec isn't absurd. The C-17 may need to fly in contested airspace. Maybe damage control is a concern. Maybe they can't use commercial soap dispensers because they're plastic and they don't want the plane to fill up with toxic fumes from burning plastic. That is a random guess. I have no idea.
I couldn't find pictures of the soap dispenser, but here's apparently a urinal from some version of the Globemaster. I get the feeling these parts are kinda custom... https://www.flickr.com/photos/morganone/122375474/in/photost...
bagels
You probably also really don't want slippery floors at a critical (or any) time.
XorNot
You also can't just drill a couple of holes wherever to mount it and you don't want it turning to a missile if the plane has to do any aggressive maneuvering.
lazide
Also, every material that goes into them needs to be tracked (with paperwork) since it was mined/smelted.
hackernewds
the article believes they should cost $10 though
Maxion
They probably would if they were made in china, and sold in Walmart by the millions.
blitzar
tbh the only solution to the problem is to spend the $250,000 it would probably cost in tooling etc and fill the Boeing ~1,000 order and sell another 99,000 to the public. At $10 each and without paying yourself anything you would probably just about break even.
jjallen
I think that isolating their relationship to a single transaction like this is disingenuous. Our government pays this company many billions per year. They likely or should have had extra of these laying around for replacements. It’s not unreasonable to expect them to charge a reasonable amount for everything.
But for some reason Boeing continually gets away with being Boeing for some reason.
edm0nd
What about designing the plane to use a common soap dispenser that doesnt cost $150k?
Why not just use existing solutions like a soap dispenser that is found on common commercial passenger planes that Boeing already has and makes?
There is no world where a simple soap dispenser is $150k.
They seemingly design them like this so they can bilk the US government aka tax payers with these absurd prices for simple objects.
arcticbull
I mean it doesn't cost $157K it costs $671. They ordered a couple hundred of them.
This one from CB2 is $40 and it doesn't conform to FAA rules and it's not MIL-SPEC. [1]
I suspect if I wanted a limited run of soap dispensers, I was only willing to buy 300 made-to-order, tested and conformant to niche military specifications and aviation specifications, I'd probably end up paying a decent chunk more than CB2.
How much does the entertainment system in your car cost vs an iPad? Is that a rip-off, or is it a niche, custom part that has to be made from automotive grade components?
How much does the soap dispenser cost in a 777 bathroom? That's the real point of comparison, not CB2.
[1] https://www.cb2.com/ramsey-calacatta-gold-marble-soap-pump/s...
oivey
Your example is a marble soap dispenser. Did you go on Google and search for the most expensive one you could find?
arcticbull
I did, yes, lol. I mean the most expensive one on sale at CB2 which is kind of a mid-range home furnishings store. I'm confident I can find a soap dispenser that costs more than $671 for home use, though.
[edit] Here you go, just under $845. I present you the Labrazel Discus Brown Pump Dispenser available at Nieman's. Only $77 per month thanks to the magic of Affirm. Good news is thanks to Black Friday you get a $125 gift card. Still not MIL-SPEC though.
https://www.neimanmarcus.com/p/labrazel-discus-brown-pump-di...
sschueller
Also I assume they are still using regular soap refills for these things or are they?
dyauspitr
It’s $150k for 222 dispensers, not just one. At $671 it’s overpriced but depending on what custom spec they had, maybe not by a whole lot. I’m imagining the metal soap dispensers in airline bathrooms maybe with some additional military specs.
ars
> What about designing the plane to use a common soap dispenser that doesnt cost $150k?
Which one? Whichever you pick you need to stock that exact same one for the next 50 to 100 years. By the time you finish exactly defining it, you are back where you started.
(Also it's not 150k each - that's the price for the entire fleet.)
Suppafly
They apparently aren't really any different from the sort you see in public restrooms and those are so cheap the supply companies give them to you for free when you buy a case of soap.
juliusdavies
Whoever wrote the article has never had to replace a cup holder in their car.
Aloha
The issue is the outmoded and excessively specific system of procurement used by the US Military - one more or less mandated by congress.
We can chose to alter how we procure, but there are good reasons why the system is as it is, so a careful effort to understand why it is like it is before we reform must be undertaken.
Chesterton's Fence applies here for sure.
KennyBlanken
Congress does not stop the US military from "keeping a database of historical prices, obtaining supplier quotes or identifying commercially similar parts."
Those procedures do not happen because generals retire into cushy barely-show jobs at defense contractors
Congress does not dare force the US military to do any of the above because the US military is a giant pork barrel welfare program for red states, especially the midwestern ones, feeding them endless useless manufacturing work and keeping all their unskilled-labor high school graduates out of unemployment - sending them into the military where they learn some semblance of how to be an adult and some skills
olelele
The only free curriculum in a right wing world. Army or prison.
unsnap_biceps
From https://www.cbsnews.com/news/air-force-overpaid-8000-percent...
> "We 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 Boeing spokesperson sought to explain in a statement.
I was thinking that it would make sense in future contracts to try to define a class of parts that are allowed to be 'unapproved' by the manufacturer and still be used, but then I tried to think of what all those parts would be and it doesn't seem like it would be that large of a list of items. I wonder if the juice isn't worth the squeeze to try to prevent this. What a strange world.
dtech
Also in a military context it's probably worthwhile to heavily scrutinize your supply chains and nog just install soap dispensers from Amazon.
Only a few months ago we saw an example of a intelligence agency implanting and blowing up bombs in equipment
openrisk
Maybe they are special dispensers that keep working in sudden and unplanned low pressure conditions?
heisenbit
> „The US military the mightiest fighting force at the time fell in one swoop when the president and command staff all died dud to the unwashed hands of a marine preparing the burgers on Airforce One.“ - Encylopedia Galactica 2424
One can make ridiculous arguments about both values and costs if one goes to extremes. It is instructive to study actual modern warfare. Sophisticated weapons only matter if there is a sufficient number. Meat attacks only work if weapons are of sufficient quality. Neither is one of the extremes.
cm2187
Would like to know the numbers built and how different from a regular airline soap dispenser. If you ask any manufacturer to build something custom made with unusual specs and you buy only 5 pieces, you will get pretty steep quotes vs the nearest approximation on amazon.
mcqueenjordan
Based on the ole' joke about outfitting custom planes, "If you want to do anything to a plane... /anything/..., it's 250. New coffee machine? 250k. Rotate the sofa? 250k." -- $149,072 for a soap dispenser might well be a screaming deal.
cebert
> “The Air Force needs to establish and implement more effective internal controls to help prevent overpaying for spare parts for the remainder of this contract, which continues through 2031,” said Inspector General Robert Storch.
I wonder if these egregious examples of expenses are due to lack of controls or intentional corruption.
8note
A fourth option would be "we want to keep Boeing in business, but can't offer direct subsidies per trade agreements"
readthenotes1
I had assumed that they were there to hide costs for things that would not bear scrutiny but that still needed to be paid for. Not just speaking expenses for ex generals, but also supplies provided for operations that many of us would be horrified to find out about.
wbl
No the black budget is a line item in the overall budget. Very few things go into it: even advanced weapons will be separated line items outside it.
tdeck
Considering the things the US funds in the open, even when doing so directly violates US human rights law, I shudder to think what would be covered up.
nathanaldensr
"I'm shocked--shocked!--that grift is occurring in this establishment!"
Sniffnoy
I have to point out here, I think the word you're looking for is "graft".
o11c
Both potentially apply, but it can be hard to prove which:
graft = obtain illegally by bribery
grift = obtain illegally by trickerySniffnoy
Well the thing to note here is that "grift" is a count noun. (Their definitions as verbs is not what's relevant here!) You can't say "grift is occurring here"; you can say "a grift is occuring here". Meanwhile, "graft", in the sense of the abuse of an office for personal gain, is a mass noun. Perhaps the commenter's mistake was leaving out an article rather than using the wrong word? The latter seems more likely to me, however.
miles
> You can't say "grift is occurring here"
Sure you can; "grift" can be used as an abstract noun, much like "crime", e.g., "Crime is occurring here" vs. "A crime is occurring here".
Sniffnoy
No, it's not. "Grift" is a count noun. You can't say "grift is occurring here"; you can say "a grift is occuring here", or "grifts are occurring here", but not just "grift is occurring here". Meanwhile, "graft", in the sense of the abuse of an office for personal gain, is a mass noun and can be used this way. Perhaps the commenter's mistake was leaving out an article rather than using the wrong word? The latter seems more likely to me, however.
tptacek
I thought the deal with all these things is that the unit prices on items don't mean anything, and that they tend to be a negotiated total price (for whatever DoD is buying --- not "soap dispensers" but like "the entire C-17 program for FY2024") that's just weirdly spread over everything, so you end up spending like $15/screw, but everyone knows the actual game.
Is that not what's happening here?
tedunangst
They just need to break down the invoice.
$72 soap dispensers
$140000 knowing where to put them
fragmede
Filling out paperwork would be the line item that balloons costs.
surfingdino
$600+ is excessive if you are not familiar with the cost of airplane parts and accessories. Add to that cost of compliance (done by humans, the most expensive aviation accessory) and you get that number.
cryptos
Percentage values in the range of thousands are somewhat pointless. A usual factor, not normalized to 1/100, would be a better fit, but would probably not make such a catchy headline.
nextworddev
It all goes into the GDP I guess
mNovak
"an inapt comparison of the prices paid for parts that meet military specifications and designs versus basic commercial items that would not be qualified or approved for use on the C-17"
This is the problem--the government heavily regulates (which the big contractors encourage) all the parts and suppliers until Boeing becomes the sole-source supplier and can charge arbitrary prices. There is a reason for it at times, i.e. to answer does someone die if this part fails or can we just stock a few spares? But obviously many many things being vastly over-specced most of the time.
Maxion
> But obviously many many things being vastly over-specced most of the time.
And sometimes they are appropriately specced.... for 1951, and no-one bothered to update the spec. They just ask for more of part 46-18432, please, and since the spec becomes more and more outdated, it becomes harder and more expensive to provide a part to that spec.
SSchick
Excuse the potential tin-foil hat but this be "cooking the books" to mask other purchases that are not suppose to be public eg. secret/top secret projects? 8000% seems obscene even for government billing...
tigereyeTO
Well yeah, tactical soap dispensers do cost 8000% more than soap dispensers because they have tactical in the name
newsclues
How much is the “overcharging” in the pharmaceutical and healthcare industries?
rootedbox
I mean.. they are really nice soap dispensers.
Onavo
Pix? I don't think Boeing ones are luxury branded ones, but I might be wrong.
unsnap_biceps
https://www.cbsnews.com/news/air-force-overpaid-8000-percent... has a picture and it's a pretty standard run of the mill pump dispenser.
Brybry
That's interesting cause this reddit album[1] has this picture: https://www.reddit.com/media?url=https%3A%2F%2Fpreview.redd....
[1] https://www.reddit.com/gallery/1al24h7 (images #9 and #10)
unsnap_biceps
That looks like it might be a hand sanitizer that was added due to covid? My work has those command strip stuck all over the building.
It's possible the soap dispenser is to the left of the sink and just hidden by the angle.
ozim
Hey those were „military grade soap dispensers” those pesky reporters always twist the truth /s.
Anyone knows is just fallout from other investigations, like „hey let’s double check everything from Boeing just in case”.
It is strange how much apologia there is for Boeing in this thread. Why does it have to be somehow the government’s fault or somehow reflective of the actual cost to make the dispensers? Why should Boeing get the benefit of the doubt, especially given their complete failures on their fixed price contracts (Starliner, Air Force One, KC-46 tanker)? They’re so unable to control costs they’re talking about never taking fixed price contracts ever again. Given those failures, it seems safe to assume they’re screwing taxpayers on their cost plus contracts.