Even sticker-shock prices don’t always motivate companies. According to our estimates, more than 10,000 parts requests are delayed or unfilled each year despite our reluctant willingness to pay premium prices defense outsiders should reasonably question. If you’re wondering why it cost the Air Force over $2,600 for a C-5 aft pressure door handle in 2018, it’s because manufacturers did not bid when the price was lower.
We now save both time and money printing them from titanium for $188… As recently as World War II, the United States had sizable numbers of in-house military makers crafting spare parts… Advanced manufacturing is bringing back this military’s maker role in the Air Force.
That was Air Force acquisition executive Will Roper writing in the Washington Post. Two comments:
Why else would no firm bid on a contract with exorbitant prices unless doing business with the government carried a high cost? Let’s say the requirement is clear and the profit rate above market averages. Then there must be some opportunity cost issue happening to prevent an inflow of supply into defense. High defense costs are a reflection of barriers to entry — not a natural law.
While lowering barriers to entry would entice companies to compete and drive down prices for defense goods, I am also supportive of Roper’s move to bring more technical/production knowledge in-house to the Air Force. We’ve already seen some of this with the “software factories” like Kessel Run. Advanced manufacturing is another potential area. Expanding government competence through technical work — perhaps 20-30 percent of the total — could make them much more efficient at contracting with private industry, understanding prices and constraints, and driving down prices even further.
The big constraint here (as in many things) is the GS pay scale. The military isn’t going to attract and retain civilian employees with the skill sets required for advanced manufacturing unless they can pay them at rates comparable to private employers. The current GS pay scale guarantees that they can’t.
There’s a *ton* of work being done by contractors that could be in-housed if the government were willing to simply pay the employees the same rates it pays for the contractors.
Agree that government compensation is a big issue, but I don’t think the govt should necessarily get into a bidding war with private industry over scarce talent. Another way about it is the Rickover approach, where he put top effort into building in-house talent from scratch rather than bidding it away. The lasting effects on the nuclear program speak for itself, as that talent can then move up or go to industry.
Rickover’s in-house talent were uniformed, not civilian. There are other issues with that approach, but compensation isn’t one of them.
If the government can’t compete with private industry for talent, in the end you get inept government. That seems to be an explicit goal for some, but the end result is disastrous, and potentially unrecoverable.