Friday 2 November 2007

Unhinged and brackets

Hubby dug up some information recently (in the public domain, so no secrets being broken), which makes you wonder what qualifications you need to work at the Pentagon. It pays to quote the article in full from Defense News:

Ken Pedeleose's eyes popped as he plowed through a bill for airplane parts in 1999: $2,522 for a 4½-inch metal sleeve, $744 for a washer, $714 for a rivet, and $5,217 for a 1-inch metal bracket.

Lockheed produced and sold to the Pentagon 219 1-inch metal brackets called clip strut support vapor barriers. Lockheed proposed charging $5,217.91 per bracket. This price was based on the premise that each bracket was produced in single-item lots, with each lot assuming the costs of setting up, tooling, manufacturing, overhead costs, profits and other factors.
The Defense Criminal Investigative Service found later that this was untrue: The brackets were produced in lots of larger quantities, and Lockheed knew this.
But the Defense Contract Management Agency rejected that price and, after careful analysis, said a fair cost was $258.90 per bracket. This price was based on Lockheed's own data, pricing methods and scales of economy, as well as historical data of previous purchases.
The final price is still in dispute; the Pentagon agreed in September 2000 to pay $1.05 in materials costs for each bracket until negotiations on a final price conclude.
When Pedeleose discovered high price tags attached to those C-5 parts in 1999, it was not the first time. Just a year before — in 1998 — he had wrestled with Lockheed over pricing for the very same parts. That struggle resulted in government savings of $34 million, according to his agency's estimates.
Nevertheless, at the time of his 1999 discovery, Defense Logistics Agency officials were negotiating a sole-source, virtual-prime-vendor contract with Lockheed to provide management and logistics support for 11,000 C-5 spare parts. The deal was signed in December 2000.
As the single source and broker for the parts, Lockheed was expected to apply modern commercial logistics technology and processes to anticipate the Air Force's needs for spare parts and coordinate with scores of subcontractors to make sure they were delivered just in time.
But the three-year contract was canceled by the Defense Logistics Agency (DLA) in summer 2002 after 19 months and a cost of $89 million.
A Lockheed official, in a written statement, characterized the company's performance on the C-5 virtual prime vendor contract as "good."


They should appoint a busy housewife to run the Pentagon, she would certainly make a better job of the purchasing division.

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