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Pentagon Lost Billions, Pennies At a Time
Hugh Pickens writes "MSNBC reports that in 1969, Walter T. Davey, an aeronautical engineer at North American Rockwell, discovered he was being overpaid by roughly 2 cents an hour, or one-third of 1 percent of his pay. Davey submitted the discovery to his superiors and suggested a simple fix. 'It was so simple to correct,' said Davey, a 79-year-old retired Air Force colonel, 'just change a few digits in the coding software.' The Project on Government Oversight, which reviewed Davey's findings last year, estimated the change could save taxpayers $270 million a year. Multiply by 40 years — the length of time since Davey made his discovery — and the figure grows to an astounding $10.8 billion. Legislators ignored Davey's letters, federal auditors deferred to Congress, and lobbyists 'descended on it and tore it into a piece of Swiss cheese' but legislators aren't eager to challenge the powerful defense lobby about a figure that's a relative pittance in the overall defense budget — even if it exceeds $100 million annually. 'A lot of people have taken advantage of the system to reap as much in taxpayer dollars as possible,' says Scott Amey, general counsel for the Project on Government Oversight. 'But when you're going up against the contractor lobby — whether you're an individual across the country or a public interest group or a government employee — it's a tough road.'"
he made $6.00 an hour, and he was complaining about being overpaid?
nice.
"Ok! Ok! I must have, I must have put a decimal point in the wrong place or something. Shit! I always do that. I always mess up some mundane detail."
just goes to show that small little amounts can add up when you have thousands upon thousands of people not willing to risk their 0.3%..
http://www.imdb.com/title/tt0151804/
Sounds like the plot to Office Space but in reverse order.
waste of effort. the story is a lie
Explicitly allowing military contractors to overcharge the taxpayer to deliver broken systems on no-bid contracts is the heart of True Capitalism(tm) and A-OK.
Making it easier for employees to enter into unions so they can negotiate better pay/benefits within the constraints of market competition is Pure Socialism(tm) and Must Be Stopped at all costs lest the USA degenerate into a communist backwater like Sweden.
Makes perfect sense!
Can we all agree to sent congress to federal pound-you-in-the-ass prison?
In all likelihood, it will be our own military contractors, too politically powerful to reign in, who will eventually destroy our military effectiveness. We can spend as much as we like(and we already do) but, so long as our spending is a mixture of "what Raytheon feels like producing" and "the ultimate weapon against the forces of the evil empire rolling across Europe in alternate-1979" it won't do nearly as much good as we would like.
I wonder if this is how the Romans felt?
You can get the official consumer price index, from 1913 up to now here. $6 in 1969 would translate to approximately $36 today.
For older historical data, plus many other interesting historical data about prices and economic indicators, this site is very interesting.
This issue could be considered more of a scapegoat for the horrendous spending and poor budget management of the many poorly managed defense contracts over the last 40 years. Trust me, 10 Billion pales in comparison to what has been directly wasted. Also, 10 Billion dollars may seem a lot, but given its based around 40 years it cuts it down quite a bit.
Money Circulates it doesn't get lost.
Say you get $10.00
You save $1.00 and Spend $9.00
That guy who got that $9.00 saves $1.00 and spend $8.00
That guy who got that $8.00 saves $1.00 and spend $7.00
That guy who got that $7.00 saves $1.00 and spend $6.00
That guy who got that $6.00 saves $1.00 and spend $5.00
That guy who got that $5.00 saves $1.00 and spend $4.00
That guy who got that $4.00 saves $1.00 and spend $3.00
That guy who got that $2.00 saves $1.00 and spend $1.00
That guy who got that $2.00 saves $1.00
So overall $10.00 was saved and $45.00 worth of goods and services were paid for and at some point the money that is saved will be spent too and repeating the cycle.
Those extra pennies have probably circulated so much that they went back into taxes and funded themselves.
If something is so important that you feel the need to post it on the internet... It probably isn't that important.
If the contractors knew they'd get "overpaid" a few pennies per person, that would be figured into their rates.
That's below minimum wage. Someone needs to find a new employer.
Or a new calculator.
Of all the expenditures the government wastes money on the one I care least about is paying those who actually defend our country. Not only that but it's one of the few powers explicitly granted to the federal government and one of the few that needs to be federalized.
There are 4 boxes to use in the defense of liberty: soap, ballot, jury, ammo. Use in that order. Starting now.
... was compensation for the time he spent participating on /. while at work.
Reply to That ||
Contrary to popular belief, the main purpose of most government spending is simply to create new money. This allows subsequent credit expansion and "growth".
The whole concept of value for money or saving taxes is completely wrong in this regard and simply doesn't fit with our monetary system. Which might help explain why nobody is keen to do anything about over spends.
Deleted
It's all Richard Pryor's fault!
(cf: Superman 3)
"My country, right or wrong; if right, to be kept right; and if wrong, to be set right." --Senator Carl Schurz (1872)
Er, you mean force workers into Unions to control them using a open ballot system. Hmmmm, billions since 1969 vs trillions in his first 100 days. Defense vs. Wealth redistribution.... Hmmm.....
Me thinks people should be skeptical of your type...
Is that EVERY Federal employee, contractors and all, use the same
accounting package. Maybe under different names, but I would
wager it is a common place accounting package which is entrenched
in the 'system'.
Be careful of these numbers. The range of goods and services available today are different, and this makes comparisons hard to evaluate. In 1969 my father earned about $5/hour. To live in the same house today with the same living standard, with his kids attending the same sort of schools and going to the same sort of university, he would need to earn around $100. This feels about right because his grandchild, in the same kind of job (but where pay rates have increased in real terms) earns nearer to $200/hour. This is because overall living standards have changed upwards. So my feeling is that $120/hour is nearer the mark.
From scarped cliff or quarried stone she cries "A thousand types are gone, I care for nothing, no not one."
This sounds like a "King of the Hill" episode, writ large.
"No, Peggy, you don't understand! They're OVERPAYING ME! I'm stealing from the government, I tell you what! And I can't get them to stop! It keeps me up at night, I tell you what!"
Forty years later: A Colonel shows up at Hank's door.
- "Mr Hill? We've responded to your letter, and it turns out you were right. We have been overpaying you all this time."
- (sighs.) "I always knew this day would come." (hold out his wrists) "I'll come along quietly."
- "No, no, Mr. Hill! You don't understand. We're implementing the fix you suggested. It'll save the government millions of dollars a year. We just wanted to thank you!"
- "Oh. Huh. Well, thank you sir. But in that case, can I at least give you back the money?"
- "I beg your pardon?"
- "Wait here." (Hank goes to his garage, wheels out a 50-gal drum on a hand truck.) "I've been putting the extra pennies in here since 1969, I tell you what. And now I'm ready to return it."
- (smiles) "No, you go ahead and keep that. We're cool." (leaves)
- "Alright! I can go to college now!"
- "Bobby, go to your room!"
- "I'm 45 years old! You can't make me go to my room!"
- "Now, mister!"
- "Aw.."
Prisencolinensinainciusol. Ol Rait!
This guy doesn't work directly for the government. I'll assume its cost plus work that he's doing, so Rockwell charges his hours directly back to the government. However, they don't charge his hourly rate, they charge Rockwells hourly rate for his job position, which is more than his personal calculated take home (or Rockwell would be making no money on his work). So the real losers here would seemingly be Rockwell as they have to pay him out of their pool of money and the $0.02/hr would come out of their profits.
Employees don't have individual rates. It typically goes by job title/position, ie: assoc engineer time is worth $120/hr, senior is worth $200/hr (purely made up numbers, not sure on the actual rate or title names), etc.
If its not cost plus then this is even more confusing as Rockwell is working to a contract dollar value and any extra pay again would come out of their profits. The accounting doesn't make a whole lot of sense to me. Unless this is some special case in which the numbers of people it would affect would seem pretty small.
None of that money was backed by gold, so it actually never existed!
The American taxpayers' dollars are the single most fantastic pile of loot on the planet. It is so big that pilfering it is a full-time job for millions of people. It's like a horde of scavengers around a perpetually gushing cornucopia.
Defense contractors are not even the big time scavengers here. No, the real T-Rexes in this game are the Federal employee unions, believe it or not. A defense contract comes and goes, and is generally audited. A union benefit is forever.
Disclaimer: I have nothing personally against unions, contractors or T-Rexes.
Fantasy: http://ferrisfantasy.blogspot.com/
You're just this penny-stealing, wannabe-criminal man.
I get the impression that the lobby didn't want the payment error fixed. What interest would they have in Pentagon leaking money to its employees? Or did it leak to others as well?
To better understand it, you should read the explanations in the backside of the chart. Awesome!
Sometimes the tracking and cost to correct the issue are more than the actual 'waste'. In pretty much every area of government there is out right fraud, THAT is where the focus should be. Or how many billions have been given out by Congress to buy votes from us with our own money? This guy is a loon.
We blame the lobbists for their stance, and rightly so. We also have to blame the politicians, congress etc...if they actually stood for what is right and is common sense the lobbyists view wouldn't matter. But the politician is only about power for himself and getting re-elected. Since the lobbyist serves his personal agenda well, the lobbyist get a lot power from it simply by the politicians selfish motivations. So the politicians are equally to blame. They don't care about 100 million dollars that is taken from your paychecks.
I've always said English was my second language. Had Romeo and Juliet been written in C, I might have understood it.
Taxpayers: "This is not a mundane detail, pHus10n!"
that is properly run?
When your accountability will not result in demotion, being fired, or such, what do they expect?
This Pentagon example is yet another reason why everyone should be running and screaming away from the current Administration and Congress goal of even larger Federal Government.
Why not harp more on the Congressional mandated waste in the Pentagon? Like how bases are kept open and programs going just to keep votes rolling in? I am quite sure it amounts to more than a decimal error
* Winners compare their achievements to their goals, losers compare theirs to that of others.
Reported by those conspiracy theorists over at CBS
http://www.cbsnews.com/stories/2002/01/29/eveningnews/main325985.shtml
flashy: http://www.youtube.com/watch?v=xU4GdHLUHwU
I'm incredibly surprised the execs didn't decide to quietly fix the problem and pocket the money for themselves.
life is a tragedy to those who feel, and a comedy to those who think
How exactly can one be OVERpaid for doing actual work.
Singers and movie stars get overpaid - the ones that earn millions for dicking around.
But being overpaid for doing an actual JOB?
Mit der Dummheit kämpfen Götter selbst vergebens
Oh, Ike, if only we had listened to you: "In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the militaryindustrial complex. The potential for the disastrous rise of misplaced power exists and will persist." Full text of his 1961 speech here: http://coursesa.matrix.msu.edu/~hst306/documents/indust.html
It appears that the plot of "Office Space" was actually a thinly veiled expose on government contractor larceny.
Rockwell has a lot more to answer for than this, ROFLMAO. There is a reason they were bought by Boeing.
What the Heck, for all of their corruption, at least we WON the Cold War, sort of.
The military has the mindset of "use it while you have it" because of the continuing slashes performed annually by Congress. It's Congress that looks at the DoD budget, says, you didn't use it all, so cut next year. DoD doesn't have final approval of its budget. And when there are special needs, Congress doesn't authorize them unless they're pork barrel projects.
and not wait 40 years to have someone not even born yet read about what a schmuck she is and how she's cost us TRILLIONS already.
10 Billion dollars may seem a lot, but given its based around 40 years it cuts it down quite a bit.
Ok, just to be clear, the math is: $10,000,000,000 / 40 years = $250,000,000 per year.
Now, from the United States Government Printing Office, the President's 2009 Budget says:
Promotes stability in the Middle East. Approximately $75 million for the Palestinian people to promote good governance and invest in education and public health. Approximately $142 million to continue support for the democratic government of Lebanon.
So that's $217 million for 2009 alone, for a major portion of the State Department's Middle East Peace Program. And the argument here is that $250 million per year, over 40 years, isn't that much?
The first principle is that you must not fool yourself - and you are the easiest person to fool. -Richard Feynman
Defence dept employees, esp armed service ones are underpaid in a manner that COSTS money already. Underpaying them by MORE will cost MORE. Even on the margin! Yet another way to reduce thier pay will yet increase loss rates and will yet again increase retraining/new-training costs of replacements and create MORE presure for retention bonuses. The theory that reducing DoD employee pay will save money is KNOWN FALSE. Sorry, it just is. This won't work, it will have the opposite impact. Keep trying, and you will come up with something, but be sure to consider retrain, new-train, and retain costs whenever you want to play around with pay.
smiles:)
Time and materials? Cost plus?
None of this is stated in the article. It is quite likely that Rockwell lost money, not the government.
I am very small, utmostly microscopic.
When it's not your money and you don't have to fight for every penny by convincing customers not to purchase the alternative (no alternative to taxes), then you have little incentive to curtail waste. That our government pads all numbers with nine zeros is very predictable given the incentives.
These opinions guaranteed or your money back.
To the Pentagon's desire for large toys, or, "Just Think of how Many F-22's you could've had if you saved that cash, every single one you asked for!"
Oh well...
...in bed
that should get a life. 2 cents an hour? so what. IF you're so worried, you could save the gov. more money by peeing faster during a bathroom break.
Exactly. The entire reason for the incredible amount of paperwork in every phase of a federal acquisition is to ensure that every decision has a person's name attached to it. If ten years later, an investigation determines that there was some impropriety in the specification/bidding/selection process, the GAO will want to know exactly who made the questionable decision.
The price for that kind of 'corruption detection' is a degree of lost efficiency.
Of course, no matter how well-constructed the rules are, someone will figure out a way to game the system. But if it's egregious enough, there'll be an outcry, and the system will be changed to prevent that from happening again.
Have you been touched by his noodly appendage?
For the first year or two of a policy 'mistake' like this, contractors make extra money. After that the increase in profitability is taken into account on the next bid. So at most there was a temporary extra expenditure four decades ago.
If the rates were changed today, the market reaction would be almost instant. Contractors would insist on the old terms for existing contracts, and increase the rates for new contracts. And charge a little extra to compensate for the new risk of additional changes. (If you make your suppliers nervous, they rationally will spend extra to mitigate their new risk and will pass that cost onto you.)
The problem is that auditing is also expensive. You have to find the "sweet spot" where the auditing costs and the ripoff costs are both minimized as best possible. It's sort of a U-shaped curve, and the best spot is at the bottom of the U, if you can find it.
My dad used to be a county gov't auditor. He found tons of suspicious issues but somehow they were never addressed. The politicians somehow found a way to say, "yes, we were audited, so everything is okay." But, nobody ever did any follow-up to check out the suspicious stuff. They yanked the budget for investigation beyond the primary audit goals and as long as they pass the primary audit, the suspicious stuff was never followed up on. My dad was not popular and was encouraged NOT to look for odd stuff outside of the primary audit. This discouraged him because he had a nose for suspicious-looking stuff.
Table-ized A.I.
Military contractors are not natural entities. They have evolved over the decades since WWI to be specialized in getting government military contracts, and away from actually producing at the lowest cost for the highest profit.
There's a joke about $700 hammers. But I've worked for some military contractors, and it's no joke. They're not so much overcharging the Pentagon, as they're probably just trying to recoup their costs. It might actually cost them $650 to produce that hammer. Seriously. And it's not just US military contractors. I've also worked for a couple non-US firms that were just as bad.
Don't blame me, I didn't vote for either of them!
Is a penny or fraction of a penny at a time. Look at how many banks got hit by that scheme.
like a decimal point in the wrong place or something...
Welcome, Comrades! Welcome to the Glorious Union of Soviet Capitalist Republics!
Not only do they spend every penny, they almost always go over budget. Spending just what you got is fine if you want your budget to stagnate, but a true bureaucrat's goal is to increase their power within the fiefdom--and you don't get that by holding your budget at last year's level. You must overspend, so you can show that you NEED more money when the next year's appropriations are made. After all, if they budgeted x and you spent x+y, obviously this year's budget needs to be at least x+y adjusted for inflation.
Interested in a Flash-based MAME front end? Visit mame.danzbb.com
No! The issue was that someone with a political agenda wanted him removed from office. Everything else was an excuse.
If the same effort had been put into keeping a reign on bush, we'd probably be a lot better off.
It's Palin who has more and a more varied political experience. (Up until the presidency.)
She served 2 terms on the Wasilla city council before running for mayor.
Then she served 2 terms as the mayor.
Ran for the nomination for lieutenant governor, lost. 4 years later ran for the governor and won. Lost together with McCain to Obama-Biden.
Reagan's career went like this.
Actor - 2 terms as governor - lost presidential nomination to the guy who inherited presidency from Nixon - president.
If you are looking for someone with more political experience in various levels of government - then Palin is your girl. She may even yet get to be the president or vice-president.
If you are looking for a cuckoo who might tip the world into a WWIII - then you are about 50-50 with both.
Read up a bit on Reagan. The guy was gone mentally far before they diagnosed him with Alzheimer's.
Anyone who can joke about killing off the poor while in the office doesn't even have common sense, let alone political acumen.
And lets not even go into how he thought that he could actually win a nuclear war.
On a side note...
Based on all those insults and harsh language you used I have a feeling that I mean far more to you then you will ever mean to me.
I hope that thought will keep you warm tonight.
Ta-tah...
Mit der Dummheit kämpfen Götter selbst vergebens
10 billion over forty years... I'm pretty sure the gov't loses that in accounting errors every year, so no big deal.
military contractors take trillions of dollars... what do the 'evil unions' take? a couple ten million?
they have to! you never know when reagan will rise from the grave and 'ban them for life' from the jobs they have spent years training to learn how to do.
I was going to post my two-cents on this... but apparently it's already gone.
So before you start blaming Clinton for everything, you might want to read up a bit on your history.
Everyone says Reagan was an idiot, but by my calculation he's the ONLY US President in 40 years to not completely screw up the middle east.
Reagan's foreign policy in the mideast was awesome. Reagan's dealings with the mideast were pretty simple. We want the Soviets out, ourselves in, we hated Iran and for that reason could forgive an awful lot about Iraq. The abortive US effort to act as peacekeepers in the Lebanese civil war did not help, but until any President since, Reagan took responsibility for making a pretty big mistake and got the troops out, and then shelled the bastards we had tried to save from the newly reactivated Iowa battleships for good measure.
When Liberals bring up Reagan being "Saddam's buddy", or that he talked to Iran, it was in the context of goading Iraq and Iran into a pretty big war with each other. Like, a giant World War I size war in the middle east. WE gave weapons to IRaq, but, we also gave Iran satellite photos to let them know where Iraqi attacks would be coming from. As a result of all this confusion, plus a good old shootdown and bombing of Libya (bonus for getting the French embassy!), all the OPEC countries started pumping like no tomorrow, the price of collapsed to nearly $10 a barrel. Life was -great-.
I'll talk more about Reagan in Afghanistan later on, but the important thing to keep in mind is that the Taliban were not the same people that Reagan supplied weapons to. Sure, they were all nutty, but they were killing Russians, and at the time, that was a good thing. A nice little payback for what the Russians did to us in Vietnam.
It was Reagan's supposedly "smart" VP that, upon assuming the office, started a chain of what now appears to be four presidents to botch the mideast.
Bush I - made huge mistake in opposing Saddam without getting rid of him. If you are not willing to finish a war, don't start one. Had the USA not intervened, its very likely that Saudi Arabia would land in Saddam's hands, but the USA could take that sort of a hit from a lost of mideast oil. Europe would fail, but, that's not really an American problem. It would later turn out that this "world view" did not buy America anything.
Clinton - could not really let Saddam off the hook for no-fly zones, but could not muster the political will to really get rid of him. Then, to make matters worse, to compensate for the awful mess the USA had made of Iraq, Clinton did everything he could to make nice to muslim nations. First put the USA on the muslim side of a second battle of Kosovo, then, even worse, he sat back and watched as the then President of Pakistan dropped hardcore islamic schools all over his country, and then did nothing when Afghanistan disintegrated into chaos as the graduates of those schools moved in (taliban), and then, watched while Pakistan got the bomb.
The problem is that the Taliban of today and the people that fought the Soviet Invasion are actually not the same. For the most part, the Taliban pulled a Mao and did enough to oppose the invasion for propaganda purposes but let others do the heavy fighting. After the Soviets left, they attacked everyone else. So its very likely that the people we were shipping stingers to in the 1980s are not the same people that are we fighting now.
And finally of course Clinton made the whole thing worse by foolishly validated Yasser Arafat (yes, I know most of thought it was a good idea at the time), AND, thus actually made the Palestinian cause something the other arab states really did have to worry about. And he didn't show any resolve when we left Somalia in disgrace. Pretty much, between looking the other way on Pakistan, letting Saddam hang around, begging muslims to love us, he made it pretty easy for radicals to argue that the USA did not "win" the Cold War and would topple shortly after Russia did.
Bush Jr. inherited quite a mess and tried to see his way out ideolo
This is my sig.
"estimated the change could save taxpayers $270 million a year. Multiply by 40 years "
it would have been a lot less 40 years ago, so to a direct multiplication is wrong.
typical of POGO; Wildly over estimate number to vilify the government.
The Kruger Dunning explains most post on