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❝ The recently announced Long Range Strike Bomber is moving forward with one hidden feature that doesn’t make a lot of sense — its actual price tag.
Despite requests by Sen. John McCain, chairman of the Senate Armed Services Committee, the Air Force has decided against releasing the final contract value to taxpayers and it stands by its decision only to release estimates.
❝ Unfortunately, with a cost plus contract, the widely varied estimates that have already been publicly released, and the Department of Defense’s long history of drastically underestimating final program costs, McCain is right to ask the Air Force to release a final cost, not only to come clean with taxpayers but also for oversight purposes…
❝ Air Force Lt. Gen. Arnold W. Bunch, Jr., said blah, blah, blah, blah…but we’re also trying to protect the critical capabilities of this asset…
❝ The B-21 program is estimated to cost about $42 billion, but estimates have ranged from $33 billion to $58 billion, with the latter being deemed to be a “regrettable mistake.”
McCain is extremely displeased that the Air Force isn’t releasing the final value of the contract. He’s not buying the service’s claim that people could connect the dots to learn something forbidden about the program. I can’t image any enemy of the state learning about the bombers’ qualifications and technologies from the public release of the actual contract price.
Having worked on military cost-plus contracts I have trouble keeping a straight face sitting here in front of my computer.
The oldest trick in the book in cost-plus-contracts is inflating so-called necessary/newly discovered costs. If your new military Bejeebus machine costs $100 million to produce and BITD you could put 6% profit on top – you made $6 million on each one you delivered to Uncle Sugar. So, the first thing you did was spend another million hiring the extra help you needed to follow the best quality control. No one questions better quality. No Congress-critter will want those extra jobs removed. The ancillary costs of the new quality control and expanded plant space needed for the new hires might run another $9 million.
Now the cost basis is $110 million and profit goes up 10% to $6.6 million for each Bejeebus machine…and so on. Stealing an additional 5 or 10% is only a start. There is incentive for cost overruns, folks. Increased profits being number one.