Well, That's New

Drudge has an interesting reader poll going. Interesting because at this time it's clearly defying other polls I've heard of with:

MCCAIN 66% 124,566
OBAMA 32% 60,277
NEITHER 2% 4,286

Total Votes: 189,129

I know it's just a web poll that is easily gamed but notice how few vote "neither", remember it has a much higher sampling number than "real" polls and is at a site that is visited by a lot of people that I would deem more likely to vote (Drudge is fairly big among MSM workers and those interested in politics).

I only read a transcript and heard a few snippets (repeatedly on radio in a hourly news segment) of course I'm heavily biased in favor of McCain but I've got to say it; Obama came across as a total disaster, a neophyte, and a scam. I have a hard time believing he's older than me when his tone so easily comes across as an arrogant teenager.

I can see how the "Democratic" party might survive a McCain victory but I don't see how they can survive an Obama victory.

As for letting so much of Obama's nonsense slide I'm not sure I blame him as it would take decades to give Obama a clue, better to ignore most of it and focus on your own message (which Obama is trying to copy in much the same way as Hillary Clinton's positions were more or less hijacked).

Well, what can he do, Rand? Just contradict him? You saw Obama do that, many times in fact, and I don't think it came across well -- he just seemed like an angry junior professor who's just learned he isn't getting tenure. Plus it convinces nobody, it's just your word against his.

On the other hand, maybe they can make some nice campaign ads using this footage: contrast actual videos of Obama's past statements and what he said in the debate. That might have an effect. But no one is going to hear McCain call bullshit on Obama in the debate and immediately say, well, John said it, so it must be so, you bad boy Obama. You rarely get much mileage out of being flatly contradictory, and I think McCain was wise to avoid it. (And Obama foolish, and showing his youth, in not avoiding it.)

That aside, I have to say I'm flabbergasted by what a bullshit artist Obama is. The guy came across as almost McCain-lite, a veritable clone. You could almost believe he had a small photo of Reagan on his wall, too. If you knew nothing about either candidate before tonight, you'd think they really aren't very different. McCain wants to give a tax cut to everybody, Obama to only 95% of everybody. Everyone wants to cut spending by wringing out "waste" and trimming earmarks. Everyone wants to "demand" that the Russians behave, and put "tough" sanctions on Iran, and add troops to Afghanistan.

But the strange part is, this is really who McCain is. I doubt you could find any daylight between what he said tonight and what he's said for the past 20 years. But it's a massive make-over for the University of Chicago law professor from Hyde Park. I know those people -- I was a post-doc at UC, and I lived in Hyde Park -- and the distance between that culture in which Obama thrives, and who you saw tonight, is like the distance between Reagan and McGovern, between Tojo and Gandhi, between Beverly Sills and Brittany Spears.

But you saw none of that. I guess McCain should feel flattered that Obama is basically running as John McCain, Democrat, and I get the sense that it gives him more confidence than he should have, way more. But what really stands out for me is Obama's chameleon ability to basically pretend to be someone completely different from whom he is, and pretty convincingly, too. He quotes Henry Kissinger approvingly! Astounding.

I'm also struck by what someone said who'd read his autobiography, which is that Obama comes across as angry all the time. Just wound tight like a clockspring, with a serious chip on his shoulder. I can see why he plays well with angry young people, the World of Warcraft generation, but to older folks as arrogant and nasty, like a college professor whose entire class has blown off the homework. You stupid clods, let me just tell you what's wrong with you, in detail...

I think the reaction will break down very clearly on generational and age lines. If you're over 40, I think Obama generally came across as a bullshitter, the kind of guy you see at job interviews all the time, who has a quick answer for everything, brimming with confidence and pep, but who sad experience teaches you doesn't actually know WTF he's talking about, and has his own agenda he's keeping secret to boot. He's going to simply not turn up at work one day, when some other ship comes in, and that's when you'll find the company server hacked and spamming the world with Russian porn advertisements.

But if you're young, and particularly because you don't have the experience that says that most of what he says is pleasant-sounding nonsense, I think Obama comes off well. He's always got an answer, often a good crack, he never lets a point go by, even a small one -- very much like an Internet-age debater! -- and he's in your face contemptuous of authority born of experience. Screw you, old-timer, you're just too afraid to dream big, and you're afraid we're going to take away your jelly beans -- which we are! You're so 20th century, we're way beyond you now. To such a person, McCain probably came off as his dad, just an annoying old bastard who's certainty that you'll see he's right eventually you just long to smash.

Indeed, Obama used that phrase "20th century" more than once. Doesn't make a lot of sense, since he doesn't need to appeal further to twentysomethings. But then, McCain pretty much played to his base audience, too, the older and more conservative, thoughtful, show me the practical details crowd, and he doesn't need them either. Neither man made a good effort at peeling off the other's weakest supporters. No weak McCain supporter is going to shift to Obama, and no weak Obamabot is going to shift to Big Mac.

I'm no fan of Obama, but you guys are so gay for McCain it's nauseating. Enough with the hero worship (He's been the same guy for 20 years? Please...) and the grasping at straws (Polls on Drudge Report? Give me a break...)

McCain has made mistakes left and right this week. If he's going to beat Obama, the campaign needs hard-nosed analysis, not fairytale wishes.

Sheesh...

More useless commentary from the anonymous peanut gallery.

I didn't say he should just flatly contradict him. But right at the beginning, when Obama led off with his fairy tale (which has become a popular myth) about "eight years of deregulation" being the cause of the financial crisis, McCain could have taken him to school, and pinned the tail on the donkey. He could have challenged Obama to describe a single regulation that disappeared in those eight years. Just as an example. Instead, McCain seemed almost to ignore what Obama had said, focusing on his own messages. Which I guess seemed to be his basic strategy throughout.

I was cheering at the "end cost-plus contracts" line, too.

Won't happen, but would be a huge boon to the government if it did.

"end cost-plus contracts"

"Won't happen, but would be a huge boon to the government if it did."

Large numbers of projects that the government wants to get done, wouldn't, with the end of cost plus. The plain facts are that the government a) doesn't always know what it wants b) changes it's minds at awkward times [and this is a HUGE driver in cost] c) doesn't have the internal engineering capacity to specify detailed designs which could be built by industry d) the history of the government doing it's own design for military procurement is lousy (e.g. it took years for Springfield Armory [back when it was the gov's] to design the Garand) e) COTS won't get you latest war-winning wiz-bang. Bottom line, no bucks, no Buck Rogers. Best quality cutting edge technology doesn't come cheap. That is reality. Ending cost-plus contracts might save money, but the military wouldn't get what it needed. Grown ups know that.

If you really wanted to save money, in a way that is practical, take a long look at the specification process and eliminate many unnecessary mil-specs that creep into every procurement. They pile on cost and don't add quality. Of course this would require that government engineers actually think through what they want.

HH,

Of course you msut realize by now that you are really off track in your estimates. All polls after the debate show Obama winning big.

McCain is an economic illiterate. How else could he talk about restricting spending in a liquidity crisis? I guess with his stunt of running off to DC and then hightailing back when the polls didn't support his move, he hardly had time to prep!

Anyway, the more salient point to many is that McCain never ever looked Obama in the eye. McCain is much too uppity I guess. This is McCain's problem - anyone who opposes him he treats with contempt. It has always been so with him, whether in the senate or elsewhere. As George Will says, in McCain's mind the two categories are exhaustive.

"[the Government] b) changes it's minds at awkward times [and this is a HUGE driver in cost]"

I'm not an expert on government contracts, but in private sector fixed price construction contracts it is normal to have a procedure for the contract price that can be adjusted by a change order. That disciplines both sides - the contractor can't just unilaterally increase the contract price, and the owner has to approve (and therefore think about) the cost of each of its changes to the scope of work. If cost plus wouldn't be acceptable when private money is being spent, it begs the question why it is acceptable when taxpayer money is being spent. But I think we can guess why that is.

"Of course this would require that government engineers actually think through what they want."

And that would require that their political masters give them a consistent set of requirements.

Good luck with that.

I used to work for a Big Corporation. While I was there, I had an eye-opening experience. We dealt with a software vendor that typically only dealt with government. Not that they only wanted government contracts, but that was where a lot of their business was.

Anyway, the shenanigans they kept pulling on us were amazing. We can only figure they would get away with it with government, but there was no way we were going to take it. We had to threaten lawyers at them a lot to follow their contract, and in the end, we had to just cut ties with them and re-start with someone else.

My favorite part was when they reassured us they were going to have the next build by a certain date. We even asked the DAY before and they assured us. Well, on the day of the deadline, they didn't have the build AND had the gall to tell us they needed twice as much money. My boss invited them to talk to the lawyers.

They also frequently gave us software drops that hadn't been QAed (even though the contract was quite clear on our expectations there). It was a farce.

Rand and all --

I'm reminded of a conversation that I had with Vern Raburn a couple of years ago. Vern was having a hell of a time selecting suppliers for his Eclipse very light jet project, and one of the reasons was that most aerospace subs were so morally and ethically crippled by cost-plus that they couldn't even understand why anyone would want to use what are best supply-management practices in every other industry. He wound up using many non-aerospace subcontractors, with mixed results.

The FAA let the weather-briefing part of the agency, Flight Service, go to a cost-plus contract "managed" by Lockheed Martin. If you write enough of a convoluted, DOD/NASA-style rec, only the big DOD primes will bid on it, and that's what happened here. Naturally, costs exploded while the functionality of Flight Service essentially disappeared. In place of the weather experts of yore, pilots now get briefed by room-temp-IQ Wal-Mart and McDonald's refugees, in telemarketing-style boiler rooms thousands of miles away, reading from scripts.

The pilots' outcry met the same kind of response the grifters at Lockheed Martin give a Congressional hearing: an attempt to buy their groups off and a publicity blitz, and no effort to improved the failed product.

Fortunately, airlines do their own weather briefing and can bypass the failed (but ever increasing in cost!) Lockheed Martin-FAA system. Private pilots are using the Weather Channel and NOAA websites to figure out the weather themselves, and just calling Flight Service to check the regulatory box. This is typical of how DOD projects work (all the way back to the TFX/F-111 and beyond). Failure is rewarded and the project is excused for never meeting its original goals, but limps along, ever expanding. Sometimes they even make it kind of work on some subset of the original goals (as the F-111 came to do some twenty-odd years after its introduction).

However, while I share Vern's view that cost-plus is a moral sinkhole and a monumental waste of tax money, I ultimately share your view: lotsa luck fixing it. Like Dr Pournelle says, nothing happens until the crooks in congress "wet their beaks." For them to get their taste, there has to be a massive surplus in the contract/earmark for the contractor to kick back.

I work for a government services company, and I take great exception to RKV's comment. There are, certainly, a small set of things that would not get done without cost-plus contracts. A good example is Apollo: no one had ever done anything similar, so there was no way to know what it would cost. You could argue the same about first-generation stealth, maybe AEGIS (or whatever the first large-scale electronically-steered phased array radar was), and the like. For this, I have no problem with CPAF or CPFF contracts.

But most things, including most aircraft, ships and the like, engineers know how to do, and thus how to estimate the cost. They've been doing this for years. For example, when building a bridge, the fact that this bridge is in a place that never had a bridge, or the design is slightly different, is not a reason to go cost-plus. In Federal procurement, it would be. This is HUGELY wasteful, because it has an incentive to make things more expensive (and thus later, because time is money).

Let me give you a scenario. You have to design and build a ship for the government. Your contract is cost-plus. You therefore propose 1/2 of what you think it will cost, because you want to get the contract, and most contracts are awarded with heavy weight given to the lowest cost proposal. Now, having gotten the contract, you want to make the most money off of it. So the first thing you are going to do is to build up the cost. There are a couple of ways to do this. You can add delays. You can convince the government to add new gee-whiz features or to otherwise change the specifications. You can simply tell the government that you cannot proceed without more money (though this only works later in the game). You can bribe — sorry, contribute to — Congressmen to put earmarks in for your program at above the original program cost. And so forth. Every time that you do this, you increase your EBITDA, your profits, because every dollar you spend on that program means X cents more profit for you. Increase your ship's cost from $200M per unit to $400M per unit, and you double your amount (though not your percentage, obviously) of EBITDA, and at zero risk to your company.

So are you an angel, who does everything possible to get the ship built on time and under budget, or are you intending to make profits for your shareholders? I'm guessing that either it's the latter, or you are not (successfully) in business with the government, at least not for long. Because people who bid actual expected cost don't win contracts, and people who build to the cost they bid don't make profits.

One of the things you also have to realize is that the Pentagon, unlike the combatant commanders, does not exist to win wars. The Pentagon exists to buy things and train people. If you work in the Pentagon for a while, you get to know all of the people who buy things. You can then leave, go to work for the very people who sell things to the government (and thus need your access to contacts) and make a huge heck of a lot of money. One former general or undersecretary is worth a mint. A dozen is worth a dozen mints. Congressmen are worth even more. Senators are worth your soul. Because these people can bring in far more money to your company than any high salary you pay them, simply by being able to get in the door and talk to the right people using the right language. So there's a huge incentive in the Pentagon to feed this cycle, and the Department of State works much the same way.

You want to know what Eisenhower meant when he warned against the military-industrial complex? This is it, guys. It's not the tendency to go to war — that's a purely political question. It's the tendency to use the interrelationships between the military and its suppliers to the enrichment of the suppliers and (later) the people on the military procurement side of the relationship, and what that does to the costs (increasing) and capabilities (decreasing) of what we get. You have to give Cheney and McCain credit for this. Cheney was an early supporter of Boyd and Richards and the other reformers within the Pentagon. McCain has been on record for years trying to reform the way the government buys things.

But forgetting about the political angle, and putting aside credit and blame questions, it's obvious that there's a vast problem with the system and its incentives, and cost-plus is a huge part of that problem. The problem feeds on itself, and it is continuing to increase as time goes on. The whole tanker deal is a case in point, as is the relatively new practice of challenging every contract or task order awarded so that they are tied up in rebids for years. (The intent there is to force the company that wins the bid to give as large as possible of a percentage of the business to the company that loses the bid, just to make them go away and stop filing challenges.)

How do we fix that broken system costing the taxpayers so much money? COTS is the answer in some places, though certainly not in major systems. Multi-supplier contracts is another answer, that works with things like uniforms: anyone can make the cloth and sew the uniforms, so the suppliers who do the best quality job as the lowest price and fastest delivery get more of the work. Another opportunity is to separate design and build with both phases competitive. In that case, companies would compete for the design contract, with the initial design work for the proposal being uncompensated. The two or three or whatever companies with designs considered most likely to meet the need are then given funded contracts (fixed price!) to develop the design and build a prototype. Any who come through that phase with a working prototype are entered into a fly-off, and whichever design wins that is the one that gets built. But the build orders are in lots, and companies can bid (fixed price!) for each lot, even if they didn't do the original design work. Some programs are simply not amenable to these techniques, like ship building. In that case, one of the things that has to be done is the government has to stop changing the specifications throughout the process. Once the design is accepted, it needs to get built as is, and then any modifications can be done as a refit.

It will take a combination of these and other methods to fix the problem, or at least reduce it. Doing nothing is just going to perpetuate the incredible waste. And I'm quite frankly glad to see someone saying that there are problems in government that are systematic, and attempting to fix them.

If you don't think McCain knew what he was talking about on " Cost-Plus," you must have missed his example of the Littoral Ships for the Coast Guard. Did You?

I didn't say that McCain didn't know what he was talking about. I said that most of the audience probably didn't. And the Littoral Ship example probably didn't enlighten them much. It's too complicated a subject for a national debate, where it's too inside baseball, and most people are unaware/uninterested in the issue, compared to the economy, or even more important foreign policy issues, like whether or not we're going to be attacked by Al Qaeda again.

I, OTOH, wish to thank RKV for giving additional examples of why to eliminate cost plus. We get a curtailment of government spending and wants, we impose discipline on the requirements for a project, and we reduce the number of whiz bang and Buck Rogers projects. Ultimately, I see that delivering what the US needs not what its prime contractors want.

It is hard to learn to grow wheat when there are a few tons of mamoth meat walking around near the cave.

It is hard to focus on tight competative work that you can lose you can on when there are lucrative can't fail contracts to be had.

"If you really wanted to save money, in a way that is practical, take a long look at the specification process and eliminate many unnecessary mil-specs that creep into every procurement. They pile on cost and don't add quality. "

Exactly. What is 1540E doing for anyone? 1540E has not prevented a single failure of a lower-standard box. Any failures that have been found in 1540E-compliant missions would have been identified by normal testing. And beyond that, 1540E is really about the government's conops planners being lazy--they want to be able to launch stuff into the South Atlantic Anomaly so that they don't have to do as much trajectory definition.

*****

Everyone points at LCS as an example of a "failure" in cost-plus. What happened there was that the Navy asked for a quote on a destroyer, and then halfway through the process they changed their minds and wanted a battleship instead. But by God it's the CONTRACTOR'S fault for the cost increase, apparently.

*****

People are also fretting about AEHF. Well...okay guys, you ask for a fourth satellite that wasn't part of the original three-bird contract, then you bitch that costs went up by 30%...was Lockheed just supposed to build the fourth AEHF for free?

*****

"But most things, including most aircraft, ships and the like, engineers know how to do, and thus how to estimate the cost."

Er, actually no. The F-35 is not just an F-16 with zigzags on the gear bays. If nothing else, the technology needed to fabricate large portions of a fighter aircraft in composite material is entirely new for the F-35 program.

******

"The FAA let the weather-briefing part of the agency, Flight Service, go to a cost-plus contract "managed" by Lockheed Martin. If you write enough of a convoluted, DOD/NASA-style rec, only the big DOD primes will bid on it, and that's what happened here."

So how is that a failure of the contractor? Sounds more like a failure on the part of the government customer. I await your explanation of how the FAA fucking up its requirements is Lockheed Martin's fault.

****

"I, OTOH, wish to thank RKV for giving additional examples of why to eliminate cost plus. We get a curtailment of government spending and wants, we impose discipline on the requirements for a project, and we reduce the number of whiz bang and Buck Rogers projects."

ah-heh. You'd rather have not seen U-2 or SR-71 or Hubble, then? These were all "whiz-bang Buck Rogers projects". Although RKV's point applies here, too, in that these were built in the days before ISO. Back then, you built it and flew it, and if it broke you fixed it. You didn't need to spend an extra 100% of your cost performing four different design reviews where you had to explain to some nincompoop that flush-head rivets did not have anything to do with toilets.

****

"Jeff Medcalf wrote:
I work for a government services company..."

Yeah. Do you have any idea of how much money is involved in these contracts? This is not just a matter of hiring a bunch of Mexicans to empty the trash bins.

****

Look, "fixed cost" is fine. But you also have to accept "fixed spec"--as in, customer writes spec and then GOES THE FUCK AWAY until the item is built.

You'll also have to accept the risk that you might not get ANYTHING. Even money-grubbing bastard thief liar Jew contractors have to eat. If the job won't make money, then the job doesn't get done; and once the profit hits "zero" then your job is OVER, and if it wasn't built then that's just too bad. Unless you want to argue that the entire defense industry should be nationalized!

And, y'know...I can't help but ask what you guys are thinking, that you'll so readily accuse contractors of sandbagging. We want to make this stuff work, too. We like seeing something go to sea, or in orbit, or get off the ground, and knowing that a tiny little piece of it has got our name on it. It's surprisingly mean for some self-styled enlightened intellectuals to suggest that everyone at Lockheed is intentionally breaking things in order to make more money for their parent company.

****

PS imagine if Falcon were on a fixed-price contract. They wouldn't even have launched a SECOND rocket, let alone a fourth!

Let me calibrate all you children out there who think cost plus (and I include CPIF and CPAF types together) are going away (or should). I have 7 years experience in manned space flight, 8 years in payloads (electro-optical, infared SDI) and another 10 years in medical manufacturing and 5 in academia. I've actually been around when the Buck Rogers stuff got built (google up Homing Overlay Experiment for an unclassified taste).

Most of you have not and are speaking out of an orifice that is not your mouth when you say things like "impose discipline on the requirements for a project." Very easy to say that, not possible to do in a good number of cases. When Jim Bennett writes "And that would require that their political masters give them a consistent set of requirements." you nuggets ought to listen carefully and learn something. Simon, when you say "I'm not an expert on government contracts" you are at least being honest. Let me tell you what would happen if you let a contract for a new and barely defined product of high complexity and high inherent cost - a) you'd get no bids or b) the bids would be far in excess of what the gov could afford to cover all the risk. And if you think the gov should have it's own design agencies, you might look at the history of outfits like the ONR. Contractor collaboration was essential to their success. Period. On it's own Uncle Sugar didn't have the right stuff. Think about it folks, do you want to make operations like NASA bigger? Not on your life. COTS is fine where applicable, but it will get you nowhere when you're on the bleeding edge.

There you have it folks. We need to be smart about how we spend our money, but victory doesn't come cheap. What good is it to save money and lose wars?

Apparently Mr. Duck has seen the elephant. Duck, you may have heard the line that runs "when the weight of the paper is equal to the weight of the flight article, then we'll be ready to fly?"

And, yes, we did manage to get a lot of great engineering done before ISO. Now we do it "in spite" of ISO.

All - Good, Fast, Cheap. Pick two, because that's all you get.

Mike Gerson wrote:
"Of course you msut realize by now that you are really off track in your estimates. All polls after the debate show Obama winning big."

And most of the MSM seems to think it was a dud of a debate - a draw - despite the very same polling. Those polls contradict the MSM and the web poll I referred to also contradicts the MSM (as well as the CNN and CBS polls). I find that interesting but you think I'm making "estimates". Something is obviously amiss both with the polls, the "general consensus" of the MSM, and your argument.

Not going to bother with the rest of your comment except to point out that at a public debate as a speaker it is always far more interesting and rewarding to watch and address the audience rather than other participants.

People who are nervous, insecure, defensive, or otherwise uncomfortable often try to hide it by focusing on the other debaters. Maybe Obama is the kind that would prefer speaking to the blackboard in a classroom? Then he can simply "copy" what is written there just like reading off a teleprompter or repeating what an opponent says.

It just dawned on me that the tea in Obama's "tea-parties with dictators" isn't there to make nice with them but to steady Obama's nerves ^_^

Anyway Obama is no Cicero that's for sure, more like that despised lecturer who puts the students to sleep without adding anything of value.

I wondered when "cost plus" contracts originated so I did a quick google. From the book, "Ships for Victory" starting on page 101, they claim that cost plus contracts were first issued during the First World War. Then suspended between wars and used again during the Second World War when things got urgent.

The use of cost plus contracts for routine tasks (yes, like developing a new ship, rocket, or fighter design) is a relatively new thing. As far as I can tell, the US has done quite well without cost plus contracts for its military and military technology research.

Further, if we look at military technology providers now, we see a remarkable decline in competition over historical levels. For example, during the invasion of Iraq there was only one manufacturer of small arms ammunition. On a cost plus contract, of course. From what I gather, surviving US shipyards do very little commercial business. Most of it is military. There's only one producer of the F-35 or the Ares I first stage. The EELV program is a feeble attempt to create two space launch competitors in the 10-25 ton to LEO category. My take is that this lack of competitivity is one of the greatest current threats to US military power. And "cost plus" contracts are a key problem with that.

Second, cost plus contracts are easy to game. Who's going to win the accounting struggle in a cost plus contract? The side with the well paid lawyers and accountants or the side which can't make up its mind and doesn't pay its staff very well? Especially since the former side can lobby and bribe for changes in the contract which benefit itself.

I have a simple question for all those proponents of "cost plus" contracts in the private world. Would your business or you, personally ever give a cost plus contract to anyone else? My take is no, you wouldn't. Business and people in private industry do that only if they have no other choice. So what makes cost plus good enough for government but not for business?

The debates are irrelevant and the current polls are more than irrelevant, when the tape comes out in another four weeks, Obama is burnt toast anyway.

McCain is probably reacting to his experience with the recent USAF tanker contract. McCain's MO is to decide that anything that's embarrassed him is bad and should be eliminated, whether it's the First Ammendment or Cost Plus contracting. Which isn't to say he's right sometimes.

It's not surprising that the anonymous "industry experts" want to keep getting Cost Plus.

Calling NASA's current manned space program "bleeding edge" is laughable, RKV. Forty years after NASA built an Apollo capsule, you still think building an Apollo capsule is "bleeding edge"? Why did we give NASA all that money in the interim, if there's been zero progress?

The fact that no one you know would bid on fixed price contract is beside the point. Government contracts are not supposed to be entitlements. If no one you know is willing to compete, why should the government give them handouts?

Daffy Duck thinks it's impossible to build a U-2 without cost plus contracts. Scaled Composites built the Proteus, which flies similar missions, on a fixed-price contract. A UAV variant of the Proteus was recently proposed by Northrop Grumman as a U-2 replacement.

Scaled also built the Ares mud fighter on a fixed-price contract, almost 20 years ago. It had an all-composite fuselage -- which Mr. Duck thinks was never done until Lockheed built the F-35. (

Believing it's impossible to do things that other companies did years ago is a classic version of the "Not Invented Here" syndrome.)

And of course, Scaled built SpaceShip One, which was more innovative ("bleeding edge") than building replicas of 40-year-old capsules. That was also done on a fixed-price contract.

Yes, I know. You're undoubtedly going to sneer and say suborbital is easy, anyone could have done that. Well, not everyone could. Orbital Sciences tried to build the suborbital X-34 and failed -- twice. The Chief Technology Officer responsible for X-34 was a man named "Mike Griffin." They spent spent well over $100 million in taxpayers money and never even got off the ground, let alone flew in space.

Scaled spent just $25 million and succeeded.

Of course, if you and Mr. Duck are right, then Cost Plus airliners built by Soviet design bureaus should dominate the air transport industry. You might ask yourself why that hasn't happened.

Albert Einstein said if you always do what you've always done, you'll always get what you've always gotten. If we continue to rely on Cost Plus government design bureaus for the next 40 years, we can expect 40 years of similar progress.

No, thank you.

Edward I never called what NASA is doing now bleeding edge. It's not. 25 years ago it was. And your attempt to put words in my mouth is not appreciated either. Today the projects aren't in the public domain. Perhaps you might do better to consider the product development departments (R&D or whatever you name them) for comparison. They are typically sink holes (cost plus no fee) for whatever cash a company has. It sure was so during my time in the medical device industry. Of course I doubt whether you've worked in a manufacturing company. And your timing is way off. The materials and processes we use in what is now commercial space were developed under cost plus contracts. Yeah Scaled is doing good stuff - standing on the shoulders of giants.

Maybe I read too much Tom Clancy. But there is that saying about "Amateurs discuss strategy, professional consider logistics."

I will give Senator McCain a pass on the immigration thing. On McCain-Feingold. But this tanker thing really sticks it to me.

Airborne tankers don't have guns or drop bombs or even carry troops (or at least most of the time). But the American way of doing airborne "gas" is, what do they call it, a "force multiplier." Forget that, without tankers, we would be in the same boat as the Europeans, that is, pretty much without much ability to project meaningul military power beyond our borders.

So Senator McCain is boasting about how he cratered the "Boeing tanker deal", bragging about how he "put people in Federal prison." Of course the follow-on tanker competition is now foundering in Federal court, and the aging tankers are clunking along. How does he think we are going to meet the next military crisis? OK, I am starting to get snarky here, he is Navy, so it is all going to be done with carrier battle groups and those pitifully small F-18 tanker refits. As if the Navy never tanks from the big Air Force planes.

The only thing getting me more to a boil is that Henry Waxman fellow and the whole Global Warming lobby. Some bright fellow in the Air Force said, hey lets build plants to fuel Air Force planes from coal. It doesn't (yet) make economic sense to do this for civilian applications, but it would give the Air Force a continental supply of fuel to make the fleet of fighters, attack jets, and tankers immune to a foreign supply interruption, and what the hey, it may move us along the learning curve to make coal-to-liquids affordable for civilian motorists.

But nooooooo! Coal-to-liquids emits more CO2 and we can't have any of that! Why don't we reequip the Navy with sailing ships while we are at it -- I bet they are harder to detect by subs because they don't have propulsion noise.

Edward Wright appears to worship at the altar of Burt, basically claiming that Scaled Composites has done it all faster, better, cheaper than anybody else. If Mr. Wright really looks at what Scaled does, he will see that they do pure point designs that are impossible to generalize to anything useful in the real world. Citing Scaled as the shining city on the hill in a wasteland of cost plus contracts is laughable.

The other commenters who seem to think that designing a brand new UAV, or the first successful hit to kill missile (SRHIT/ERINT/PAC-3, not the dead end HOE), or an autonomous helicopter (all things I've been heavily involved with) is something that can and should be done on a fixed-price contract (after all, one bridge is like any other, right?) . . . it can maybe be done, but only if you're willing to let system development take a lot longer. If DoD put out lots of little fixed-price contracts to do the basic research, refine the concepts, refine the requirements, do multiple passes through dem/val, and not put out the final RFP until you had representative precursor systems in the field (because that's the only way you really know that you have the requirements right), then you could put out a fixed-price RFP, knowing that there would be no requirements changes and that the bidders have all of the relevant technology available at TRL 7+. But it's going to be much slower to get the end product to the field. Cost-plus enables concurrent engineering, which gets stuff in the field quicker but is more costly because you have to fix the requirements and technology mistakes/problems when the HW and SW are mostly done. The old adage is true: "faster, better, cheaper - pick any two."

However, cost plus should NEVER be used unless there is significant requirements and/or technology risk, and you have to take the concurrent development risk. Buying bullets on cost plus - crazy.

So Paul Milenkovic is pissed about the tanker mess? He should be pissed - directly at Boeing and the congressmen and senators from Boeing (excuse me, from Washington state, Kansas, and Illinois). McCain is really a hero here. He dug into the tanker lease program when there was zero political advantage to it, angered the Air Force - and led the way to uncovering a sweetheart deal that raped the taxpayers, and oh by the way included the most blatant procurement corruption of the last 30 years, corruption that went well beyond the tanker lease. He forced a competition that enabled the Air Force to pick a much better product than the Frankentanker that Boeing offered. Then the Boeing lobby screamed bloody murder - "Bbbbbbut . . . Northrop wasn't supposed to actually WIN!" Boeing tried to con the public again, got beat fair and square, but managed to stir up enough liberal Democratic outrage (including statements about "protecting American jobs" by the One Himself) to cause Secretary Gates to cancel the program. That's what's worthy of being pissed off at, not what McCain did.

DensityDuck said:

"Jeff Medcalf wrote:
I work for a government services company..."

Yeah. Do you have any idea of how much money is involved in these contracts? This is not just a matter of hiring a bunch of Mexicans to empty the trash bins.

Dude, I didn't say we emptied the trash bins in Foggy Bottom. Yes, I recognize just exactly how much money is at stake.

Look, "fixed cost" is fine. But you also have to accept "fixed spec"--as in, customer writes spec and then GOES THE FUCK AWAY until the item is built.

You'll also have to accept the risk that you might not get ANYTHING. Even money-grubbing bastard thief liar Jew contractors have to eat. If the job won't make money, then the job doesn't get done; and once the profit hits "zero" then your job is OVER, and if it wasn't built then that's just too bad. Unless you want to argue that the entire defense industry should be nationalized!

As I noted, there is a place for cost-plus. Development of things that are truly new (most things are not) is one of them. Even there, costs can be reduced by introducing more competition, while quality can be increased by using fly offs and the like. But there is a place for cost-plus. That place should be very, very limited though. Right now, it's the norm.

And, y'know...I can't help but ask what you guys are thinking, that you'll so readily accuse contractors of sandbagging. We want to make this stuff work, too. We like seeing something go to sea, or in orbit, or get off the ground, and knowing that a tiny little piece of it has got our name on it. It's surprisingly mean for some self-styled enlightened intellectuals to suggest that everyone at Lockheed is intentionally breaking things in order to make more money for their parent company.

Sure, the engineers want to get something done. No doubt about it. And the managers want to get something done eventually, no doubt about it. But the managers want something to be done over a long period of time and at high cost, because that is where their incentives lie. And the engineers are engineers, they want to get something done perfectly, and perfect takes time and costs money. Good enough is not in the vocabulary of most engineers. (I say this as a person whose original training was as an aerospace engineer. It does not take everyone at LockMar to break things; all it takes is everyone responding to their incentives in a rational way. If we want to change the procurement mess (surely, you would not deny that it's a mess?), we have to change the incentives. Introducing contractor risk and competition would go a long way down that road. Again, not everywhere, but everywhere we can reasonably do so.

Cost-plus jobs aren't a way for companies to fleece the government.

Cost-plus jobs are the way that a contractor and the government share the risk of new development.

For items that the development costs are well-known, fixed-price contracts are the way to go.

But when you're trying to build something that hasn't been built before, a fixed price contract is a non-starter - a company would go out of business if it discovered, during the development cycle, that there were things that caused the price of development to skyrocket.

Contractors give their best estimate at how much something is going to cost. But if something unforseen arises, then the cost-plus contract allows companies to share that burden with the government.

If there are no cost-plus contracts, contractors won't even bother to build something they're not 100% certain of the end cost of. And that will result in fewer technological advancements.

A bad idea by McCain.

Earl, nice fairy tale. It's not government's job to suck up risk for a contractor. As I see it, if contractors really were giving their best cost estimates, then they're regularly overestimate prices not consistently underestimate them.

The other commenters who seem to think that designing a brand new UAV, or the first successful hit to kill missile (SRHIT/ERINT/PAC-3, not the dead end HOE), or an autonomous helicopter (all things I've been heavily involved with) is something that can and should be done on a fixed-price contract (after all, one bridge is like any other, right?) . . . it can maybe be done, but only if you're willing to let system development take a lot longer.

I don't know who posted this, but it's unrealistic. Let's give an example of how the real world works in salvaging ships on the high seas:

Salvage work has long been viewed as a form of legal piracy. The insurers of a disabled ship with valuable cargo will offer from 10 to 70 percent of the value of the ship and its cargo to anyone who can save it. If the salvage effort fails, they don't pay a dime. It's a risky business: As ships have gotten bigger and cargo more valuable, the expertise and resources required to mount a salvage effort have steadily increased. When a job went bad in 2004, Titan ended up with little more than the ship's bell as a souvenir. Around the company's headquarters in Fort Lauderdale, Florida, it's known as the $11.6 million bell.

Exactly the scenario where it is claimed that fixed price contracts can't work. Huge risk, lots of uncertainty, time pressure. A similar example is oil well firefighters.

As I see it, there's almost no circumstances when government needs to help the contractor with risk. The money, paid when the job is done right, does that. If it's not enough, then nobody takes the contract. Simple as that.

Good point, Karl. I have a follow-up post resulting from it.

I think this conversation is fascinating, and I didn't want to interrupt it. Since the on-topic conversation will now be redirected to the follow-up post, Rand, I hope you won't mind if I say this:

Density Duck, your comment was pretty interesting, but at the end, you said "Even money-grubbing bastard thief liar Jew contractors have to eat."

Either you are anti-semitic, or you were implying that your opponents were anti-semitic. Maybe you thought you were being funny. Regardless, the slam on the Jewish people was completely stupid.

Hey Rand, nice job on conversation management. If your point is getting hammered, just move to a different echo chamber! Problem solved.

Karl Hallowell:
"The use of cost plus contracts for routine tasks (yes, like developing a new ship, rocket, or fighter design)..."

Uh, whoa, HOLD THE PHONE there. Designing a mass-production compsite-structure VSTOL fighter aircraft is not a "routine task". Designing an orbital rocket with significant payload capability is not a "routine task". That you would suggest that these are shows how little you understand of what you're discussing.

"I have a simple question for all those proponents of "cost plus" contracts in the private world. Would your business or you, personally ever give a cost plus contract to anyone else?"

Sure! Of course, they'd have to be doing something involving significant risk AND critical need; something where "failure is not an option" is more than a clever turn of rhetoric. And if you want to say that fifth-generation fighter aircraft involve no risk and aren't critical, then I have to question what dimension you're posting from 'cause it damn sure ain't this one.

PS there are burnt corpses in the Mojave Desert who would attest to the fact that rocket development is anything BUT routine.

Edward Wright:
"Calling NASA's current manned space program "bleeding edge" is laughable, RKV. Forty years after NASA built an Apollo capsule, you still think building an Apollo capsule is "bleeding edge"? Why did we give NASA all that money in the interim, if there's been zero progress? "

Dude, NASA's original plan for the STS-RLV was a super-sized Apollo capsule. Using an aerodynamic body is TREMENDOUSLY wasteful in terms of mass fraction. There's no reason you would want an aerodynamic body unless you wanted significant post-reentry cross-range, which is more appropriate for a spy-sat launch mission, and that's what the USAF designed the Shuttle to do. (Oh, you thought it was a NASA vehicle? Nope. The USAF designed, built, and bought it, and they put a NASA sticker on the side to meet arms-control requirements.)

"Daffy Duck thinks it's impossible to build a U-2 without cost plus contracts. Scaled Composites built the Proteus, which flies similar missions, on a fixed-price contract."

This is remarkably ignorant of the facts. First off, Proteus was built as an internal Scaled Composites project; there wasn't any kind of contract involved, fixed-price or otherwise. Second...how many Proteus vehicles are there? Just one, you say? Gosh, I guess it turned out to be unprofitable and that's why they only built one. Which is exactly how private industry responds to initiatives that don't result in profit.

"Scaled also built the Ares mud fighter on a fixed-price contract, almost 20 years ago. It had an all-composite fuselage -- which Mr. Duck thinks was never done until Lockheed built the F-35."

Do you honestly not understand the difference between a one-off prototype and a mass-production aircraft? (sorry, stupid question; you've demonstrated that you don't.)

"Of course, if you and Mr. Duck are right, then Cost Plus airliners built by Soviet design bureaus should dominate the air transport industry."

Ahem. I never said that cost-plus was the solution to every problem, or that every cost-plus contract is always successful. I _did_ say that an endeavor involving significant risk needs some kind of compensation for that risk, or else it won't happen. After all, Columbus was a government contractor.

"Karl Hallowell wrote:
Earl, nice fairy tale. It's not government's job to suck up risk for a contractor. "

Fuck the government, then. Let them form Official R&D Departments and cover the risk themselves. Perhaps some sort of National Administration for research into advanced Air and Space vehicles...

Hey Rand, nice job on conversation management. If your point is getting hammered, just move to a different echo chamber! Problem solved.

This is certainly one of the more stupid comments that you've ever made here (and that's a high bar).

I didn't "move to a different echo chamber." I just started a new post at the top of the page with some new points. I linked it back to this thread for anyone interested.

But please, continue with the moronic paranoia.

Edward I never called what NASA is doing now bleeding edge. It's not. 25 years ago it was.

We're talking about Cost Plus contracts in the context of what the government does today, not what it did 25 years ago.

If McCain said he wanted to invent a time machine to go back and end Cost Plus contracts 25 years ago, you might have a point. He didn't, and you don't.

What was NASA doing in 1983 that you consider "bleeding edge"? ISS? National Aerospace Plane? Where is it today? Are we better off for those projects? Why or why not?

And your attempt to put words in my mouth is not appreciated either. Today the projects aren't in the public domain.

You're the one putting words into mouths. I never said anything about "public domain." This is the first time copyright even came up in this conversation, and I don't see what it has to do with Fixed Price vs. Cost Plus contracts.

Perhaps you might do better to consider the product development departments (R&D or whatever you name them) for comparison. They are typically sink holes (cost plus no fee) for whatever cash a company has. It sure was so during my time in the medical device industry.

First, there's a difference between product development and research.

Second, just because your company had a department that was a sink hole does not mean the government is required to bail them out. In most industries, the government does not do that (including medical devices, to the best of my knowledge). That's pretty much reserved for aerospace companies, car manufacturers in the 1980's, and banks.

Of course I doubt whether you've worked in a manufacturing company.

Just one of many things you're wrong about. Do you know what happens when you "assume"?

And your timing is way off. The materials and processes we use in what is now commercial space were developed under cost plus contracts. Yeah Scaled is doing good stuff - standing on the shoulders of giants.

No, my timing is not off. No one denied that commercial space never used materials that were previously developed under Cost Plus contracts. That's the sort of strawman usually thrown out by posters who hide their real names, as their argument is sinking. Along with throwing out snide insults at anyone who disagrees with you.

"Density Duck" wrote:

Dude, NASA's original plan for the STS-RLV was a super-sized Apollo capsule.

First, if you want to sound like Daffy Duck, you need to call people "Buster," not "Dude."

Second. you're confusing the Orion CEV with STS (which was the Space Shuttle).

You're probably confusing Orion with Max Faget's original fixed-wing orbiter concept -- which was nothing like a super-sized Apollo but did have shorter cross-range which might explain some of the following babble.

Using an aerodynamic body is TREMENDOUSLY wasteful in terms of mass fraction. There's no reason you would want an aerodynamic body unless you wanted significant post-reentry cross-range, which is more appropriate for a spy-sat launch mission, and that's what the USAF designed the Shuttle to do.

Cross-range is tremendously useful if you need to return to fixed launch sites on a timely schedule. Consult an orbital mechanics book for the reason.

that's what the USAF designed the Shuttle to do. (Oh, you thought it was a NASA vehicle? Nope. The USAF designed, built, and bought it, and they put a NASA sticker on the side to meet arms-control requirements

Was that before or after the Air Force faked the Moon landings???

You've drifted from Daffy Duck to Elmer Fudd and Art Bell. Get back on character. :-)

This is remarkably ignorant of the facts. First off, Proteus was built as an internal Scaled Composites project; there wasn't any kind of contract involved, fixed-price or otherwise.

Yes, this is remarkably ignorant of facts. Proteus was not an internal project, it was funded by Scaled's parent company, Wyman Gordan.

How does that relate to your other remarkably ignorant statement -- that a U-2 class aircraft can't be built on a fixed price?

Second...how many Proteus vehicles are there? Just one, you say? Gosh, I guess it turned out to be unprofitable and that's why they only built one. Which is exactly how private industry responds to initiatives that don't result in profit.

Yes. In private industry, there is no guarantee that every project will make a profit. That's a feature, not a bug. If your company is afraid to compete and take risks, it should make room for a company that is, not ask the government for handouts.

"Scaled also built the Ares mud fighter on a fixed-price contract, almost 20 years ago. It had an all-composite fuselage -- which Mr. Duck thinks was never done until Lockheed built the F-35."

Do you honestly not understand the difference between a one-off prototype and a mass-production aircraft? (sorry, stupid question; you've demonstrated that you don't.)

Do you honestly not understand your own sentences? You didn't say anything about "one-off prototype and a mass-production aircraft." You're misquoting yourself.

What you said was, "the technology needed to fabricate large portions of a fighter aircraft in composite material is entirely new for the F-35 program."

The technology to fabricate large portions of a fighter aircraft from composites was around long before F-35. That's proven by the fact that Scaled Composites fabricated large portions of a fighter aircraft from composites long before F-35. The entire airframe, in fact.

The fact that the Pentagon refused to allow Ares to go beyond the prototype stage is irrelevant. You can't even build a prototype if you don't have the technology.

By the way, building prototypes is what Cost Plus contracts were developed for. Did you really not understand what we were talking about?

I _did_ say that an endeavor involving significant risk needs some kind of compensation for that risk, or else it won't happen. After all, Columbus was a government contractor.

Once again, you are distorting statements. NO ONE argued there should be no compensation. Ending Cost Plus is not the same as "no compensation."

If you do some research, you'll discover that Columbus was a *Fixed Price* government contractor -- the type of contractor that you think can never take any risk.

Duck,

Uh, whoa, HOLD THE PHONE there. Designing a mass-production compsite-structure VSTOL fighter aircraft is not a "routine task". Designing an orbital rocket with significant payload capability is not a "routine task". That you would suggest that these are shows how little you understand of what you're discussing.

And you say this why? If I were to personally issue contracts the mass production of said aircraft or rocket, then yes, it would not be routine. But the US government has been contracting the building of airplanes since before the Second World War, rockets since just after. This is routine for them.

Sure! Of course, they'd have to be doing something involving significant risk AND critical need; something where "failure is not an option" is more than a clever turn of rhetoric. And if you want to say that fifth-generation fighter aircraft involve no risk and aren't critical, then I have to question what dimension you're posting from 'cause it damn sure ain't this one.

If the private world is issuing such high profile contracts, perhaps you could give a couple of examples?

What is this talk of risk? Even now, the US government doesn't just tell some company, "Make me a new fighter airplane from scratch." Any such project goes through phases. Among other things, it means that the contractor is not exposed to that much risk at any stage. There's no chance that they'll have developed and built a fighter plane, with a few hundred planes sitting in warehouses, only to fail some final tests and lose the contract. Incremental steps and acceptable payouts at each step limits the contractor's exposure to risk.

PS there are burnt corpses in the Mojave Desert who would attest to the fact that rocket development is anything BUT routine.

Of course not. Death often occurs in routine activities. People die all the time in construction. People die all the time while driving to work.

Do you honestly not understand the difference between a one-off prototype and a mass-production aircraft? (sorry, stupid question; you've demonstrated that you don't.)

The distinction is insignificant. It's just more requirements. The point is that someone had to develope the vehicle. And as the Ares shows, fixed price is good enough.

Fuck the government, then. Let them form Official R&D Departments and cover the risk themselves. Perhaps some sort of National Administration for research into advanced Air and Space vehicles...

Another alternative is that the US government pays competent businesses fixed price contracts (with the price more than covering the risk) to do the work that the US government wants them to do.

Edward: At this point you've conclusively proven that you don't know the history of the space program, or much of anything regarding aerospace technology. Leave this conversation and read a book.

Karl:

"Another alternative is that the US government pays competent businesses fixed price contracts (with the price more than covering the risk) to do the work that the US government wants them to do."

Congratulations, you agree with me that development is not routine and does involve risk. Now you need to prove that fixed-price contracts are the best option to compensate contractors for taking on unknown, unknowable, open-ended risks.

"What is this talk of risk? Even now, the US government doesn't just tell some company, "Make me a new fighter airplane from scratch." Any such project goes through phases."

Really? What "phases" went into F-35 or F-22? The only "phases" were "flyable prototype" and "first-block production aircraft". I suppose you could say that the concept of production blocks is a risk mitigation, but if you follow that line of thought then no contract is ever closed!

"But the US government has been contracting the building of airplanes since before the Second World War, rockets since just after. This is routine for them."

:rolleyes: because, as we all know, an F-22 and an F-86 are exactly the same thing.

"(quote)Do you honestly not understand the difference between a one-off prototype and a mass-production aircraft?

The distinction is insignificant. It's just more requirements."

As with Edward, you show here that you don't understand anything about aircraft production.

Let me see if I can break it down into real simple terms. If I'm working on a one-off study not-for-production prototype, then I can afford to spend, e.g., eight months drilling out every single rivet head on the wing upper surface and filling them with conductive goop so that I can avoid having any floating metal surfaces (and consequent grounding problems.) If I'm building a mass-production aircraft, I can't spend eight months on one step of assembly for EVERY example; so I spend some money up front to design an electrically-grounded rivet.

The point is that saying "oh well we did something like this yea-many years ago" is not a conclusive argument, because "like this" is often much less "like this" than an inexperienced layman realizes.