Military contract price gouging: Defense contractors overcharge Pentagon | 60 Minutes
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- Опубликовано: 21 май 2023
- A six-month 60 Minutes investigation found the nation’s defense budget is plagued by a military supply chain rife with price gouging.
#60minutes #news #military
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As a former employee at a large Defense contractor, I can firmly say these companies are leeches on the national security of our country. So many of my coworkers added zero value to our contracts, other than keeping seats warm.
Thanks for helping the enemy
Same boat sir, it’s pathetic to watch in action.
General Dynamics Information Technology....
@@Rust_Rust_Rust China? Russia? Cartels?
when a government contract requires diversity quotas to be filled, they are forced to hire under qualified, over payed, lazy people that are the best job security of the bunch simply because of their skin color or background.
This is real journalism, something sorely missed in the modern age.
I know, right? Now, how about a report on the “intelligence community’s” meddling in domestic politics here in the US? Highly illegal, but clear as day.
😂
@@jtwilliams8895 11991 Soviet Union disbanded. 1992 military budget cut by 50%. 1993 51 military companies merge into 5
Sadly it isn't.
it's not missed. it's here. right here. you're looking at it.
I worked as a defense contractor for roughly seven years. The amount of waste is incredible. The sad part is that most of these contractors are former military gouging their own. So much for patriotism and supporting our troops.
Love that Raytheon and Boeing gouge the country for 40% profit on the Patriot and the Russian shut down a battery in Kiev after they blew off 30 missiles and god only knows what they hit. Still wondering if the got the command trailer on top of the radar and 5 launchers.
Merika, its owned by corporate interests
That’s how these military leaders that retire get into business with the contractor before times comes to retire. Gets them squared away for nice comfy office jobs making a extremely large salary.
yep, companies with retired generals on their boards of advisors.
@@benzun9600 12:51 The ultimate goal of capitalism is to get as much profit as possible. to create monopoly and imperialism
Im prior Air Force and even as a low level airman I saw the prices we paid for things. Its INSANE what we paid these companies for things.
1991 Soviet Union disbanded. 1992 military budget cut by 50%. 1993 51 military companies merge into 5
Price gouging should be considered an act of treason.
Used to be. But those days are long gone. The only thing the US ruling elite care about is profits. And the ruling elite really run everything. Populism is a delusion.
so what about local companies and people like tyson price gouging food etc?
Or at least an act of capitalism.
Price gouging during the civil war resulted in the False Claims Act. The law allows whistleblowers to receive a portion of the proceeds recovered from by the government and allows government to fine violators. Unfortunately, it hasn't produced much in the way of reform. Businesses (particularly the pharmaceutical industry) turn right around and break the law again, treating fines as the cost of doing business.
@@Eclipse-lw4vf dumb
They should run this story every month.
Day
Why? you think you can SHAME the politicians into not wasting our tax dollars?
hasn't worked yet.
ACCOUNTABILITY! ACCOUNTABILITY! ACCOUNTABILITY!
Every day. Let the people know. Watch change happen when Americans knows the worst of it. If defense contractors don't change,they won't be around anymore.
PLEASE Like this and send it on, and if you are a tech person, find ways to launch this and give it legs. This Is America's feet of clay.
give this guy a bronze star medal.. by simply being uncorrupt able is amazing nowadays. He isn't afraid of intimidation, death threats and etc
As someone who oversees military contracts......I live and breath this nightmare daily
My father was both a USAF officer and electrical engineer for defense contractors for decades... this stuff drove him nuts. A project he worked on needed a tape recorder with certain requirements. They were going to spend hundreds of thousands of dollars on designing a custom unit and, because the would need relatively few, the manufacturing was going to be thousands for each.
He simply found a quality off-the-shelf unit and proved it met all the required specs. Saved hundreds of thousands on design and hundreds of thousands on manufacturing.
wow 😳
You know what’s funny, I repair 12v amplifiers and have received amplifiers for repair from; air force electrical engineer, electrical engineers, other repair techs. And some where very simple repairs. I have zero education in electronics yet can repair devices that these people attempted but couldn’t.😂😂
The bureaucracy and red tape reminds me of Communist way of doing things and wasting money. It is astonishing that this is happening in US and we the taxpayers are witnessing this disgrace.
@@jeanious2009 I think you're seeing it the wrong way. An electrical engineer couldn't diagnose the issue? lol. Most people in those fields love to tinker. They have plenty of money to rip something apart just to play around and then have someone else finish.
so ? then he's second most hated Guy after this gentlman , THEY RIPPED OFF WHERE EVER THEY CAN , and nobody hurts from them NEVER.
I worked in the defense industry for about 6 or 7 years and I had to get out of it, the whole thing seemed geared towards racking up billable hours to the government, nobody was there to protect the country, and the involvement of the top Military brass was atrocious. Top military officials recieved all kinds of kickbacks, mostly in the form of high level jobs with the military contractors they were supposedly there to oversee. The whole defense industry is a mess.
We call them the Perfumed Princes of the Pentagon. Imagine how much even vendors are willing to pay a general if he designates their port as a stop on the whistle tour. Reduce our mil budget by 80%. That is the correct number, or we will be in perpetual war...
Well you just described the FDA and the CDC . This whole thing makes think with how big is the military budget gap with Russia and China, How really big is the gap in Military Power?
Vladimir Putin was talking about it in his interviews with Oliver Stone.
Corruption and Greed will be the Downfall of the US Empire
The food, water, and shelter industries need this kind of blank check.
@@tdot1651 Putin and Oliver Stone, now that’s a useful duo for reliable information lol.
The dubious nature of a conversation between those two aside, greed and lack of shame or respect or accountability by those that can take advantage is a major problem here… especially if only one company is making a munition or device.
Companies acquiring more and more smaller companies is a problem in banking (too big to fail) with hospitals and other industries (reducing workers ability to negotiate wages).
@tdot1651 surprisingly Russia is even more corrupt and inefficient than the US
Wow, absolutely disgraceful! Profit over the security of our country and troops on the battlefield. Great reporting by 60 Minutes as always.
Price gouging by national defense contractors should be seen and treated as a grave threat to national security
But the problem is there are too many people in power whose incentives are to not care
IT is but the war is crap and money is king , and somewhat it is good that it is hapening , then the already useless killing of each other gets more difficult , what is good , although other areas than military would need the money/resources too ..
The Government needs as a national priority to open up a investigation for price gouging.
Too bad the government probably laid off the people who could conduct an investigation like how the video says they laid off half the people responsible for negotiating contracts to get fair pricing for the government.
Senator Harry Truman chaired a special committee investigating similar practices during WW II. It was shocking ... we were fighting for our survival and companies were reaping immense profits.
It would be like the police investigating themselves. They always find "no wrongdoing". When dealing with corrupt organizations like the DOD or police it would take an outside group coming into and essentially completely dismantling it to change anything. Changing corruption from the inside is basically impossible.
You really dont need to, there is a whistleblower law and plenty of ways to report things like this.
LMAO, the government is causing the very problem that they are complaining about..
As an Air Force veteran that delt with supply and logistics in areas of my 20 year career, these contractors gouge TF out of their parts and supplies. We, the taxpayers, are being sold down the road to improve a defense contractors' bottom line.
I’m sitting here watching this thinking “wtf does the pentagon pay for? thats taxpayer money”
It's like when a teenager gets ahold of their parents credit card
Responds, "THANK YOU FOR YOUR "SERVICE!!"" Blindly
American companies and American jobs though. It ultimately is good for the economy and will create jobs
You know how many times they said about the price gouging, for decades this has been going on and nothing gets done about it.
we have the exact same issue in the UK MOD. Contractors will work incredibly slowly, overcharging for every single possible item along the way. Even our camp maintenance contractors are appalling, worst experience I had was with Amey where a circuit breaker tripped, the entire building of 60 - 70 residents losing electricity, and it took them 5 days to get a technician out to flip the breaker back. We pay through the nose for everything ,and the worst of it is there is very little sign of change. At least the US DOD has this guy pushing for reform, as far as im aware the UK MOD has no such drive ongoing.
Twenty five years ago, I was doing a Masters of Research engineering degree. I joined a Defense company in Britain to carry out my research project. At the time, that company had just been privatized. I presume you can imagine which company that was.
In one of the starting meetings, I heard people saying that the project had a price tag of £500MN, Five Hundred Million Pounds, about eight six hundred and twenty million US dollars. People were asking openly: "Why?", "What is supposed to happen with all that money?". Remember, these would be the exact same people, in the exact same design offices, and to use the exact same production facilities. Well, what was supposed to happen, and what people weren't used to take into account, were huge price premiums for the earnings of the new owners.
Which of course soon after followed with the privatized trains, the privatized airports and the £6.00 "kiss-and-fly" fees, the privatized Water and Electricity Utility companies, etc etc. And more recently, the privatized Royal Mail: Since the Royal Mail was sold off to "investors", it share price has skyrocketed. Why? Because, like all other Public companies before it, it is a perfectly healthy and profitable company.
@@uslaserguideddemocracyseed1039 I never understood why they couldn't be private companies with government holding golden or class A shares. So owned by the people, but still able to raise capital, and release funds to the nation, but without the nonsense of third party profit motives.
Royal Mail used to fund significant portions of the NHS in the 80's and 90's and with so much profit was also told to reduce its pensions funding to increase government coffers to support the treasury demands of the Major government.
A private company owned by the government gets the capital investment and streamlining benefits of private business, the public motive for operation, along with a arms reach distance from the current political class.
I assume you mean QinetiQ rather than BAe as that was more than a decade earlier than your 25 years, to have worked there around privatisation infers a certain level of remote respect.
As a former federal employee, this has been a decades old problem. In my opinion, it seems like severe corruption with defense contract awarding. Lemme give ya another example. When I was in the Air Force, my technical orders demanded that I only use a specific permanent marker to write something on the interior of the airframe. The marker cost $1000.
That's nothing NASA spends $1million on a pen designed to work in space, pencils can't be used as graphite dust could start a fire
@@contentsdiffer5958 Yup. The development of the pen is what cost the money - not the pen itself.
@@contentsdiffer5958 I still hear today thanks to internet that NASA spends $1million on each space pen and Russians still use a 10 cent pencil
@@again5162 the russians initially did use pencils. Then they discovered that fragments of graphite floating about a cabin full of delicate electronics is probably bad
This has been going on for years!! Politicians own stock in these companies! Pathetic!
British parliamentarians were heavily invested in the East India Company when they passed the Tea Act of 1773. Literally nothing changes.
Shameful if one has any sense of shame
Study found 182 members of congress (overtime) were violating the stock buying rules. The punishment set for themselves is a $200 fine, if caught. Only 4 members have ever been proven to have paid a fine for stock trading.
@@gesshoku92 how set the price of that fine???? A measly $200 fine????
God bless our brave men and women serving our -companies- I mean -countries- I mean country
As a shareholder, I'm okay with this. Thanks for your contribution
I agree, after this interview and the war and Ukraine I’ve opened up a large position all in these companies except Boeing
As a contributing citizen I believe it isn't just the case presented here, it's across the board in government positions and our representatives on all levels seem to want to keep spending our money without being accountable. The interworks aren't interested in transparency and it's becoming more important than ever to keep America on the map because it's more than obvious the corruption is malignant. Taxpayers are the surgeons.
Ii worked for a company that is a contractor for Boeing. The particular Boeing site that we contracted with was caught selling used parts as new parts to the military. The top people were fired, and the used parts were replaced with new. Anyone who works in Aerospace knows about price gouging, so i dont understand why this hasnt been delt with a long time ago.
Because the generals leave the Army and go to advise these people on how to do it. That’s why.
Because the government agencies or individuals get kick backs. This happens in Arizona.
ACCOUNTABILITY! ACCOUNTABILITY! ACCOUNTABILITY!
Yup…
@@lubetime-autorepair7078 Not just Generals...ALL ranks to it.
Any single person that was in the military can agree with this. I was a Bradley systems maintainer and saw parts costs. It’s absolutely insane even what a single bolt costs. I have a feeling there is price kickbacks higher up the chain.
The fish rots from the head . .. so u can be sure it the head is the most rotten part. Just look at the Biden regime.
31 trillion in debt and rising, 3/4 could well have gone to corrupt politicians and their ilk.
Boing!
Wow! Thank you 60 Minutes.
I have to think this piece is going to upaet some of your advertisers. That shows courage in this day and age. Kudos!
"BUT THE NATIONAL DEBT!!! We need to cut spending on the poor!" The fact that none of this ever enters the public debate over spending priorities is outrageous. The moment anyone says anything about cost controls, they get construed as "not supporting the troops".
"You don't actually think they spend $20,000 on a hammer, $30,000 on a toilet seat, do you?" -Julias Levinson
When I was active duty, asking questions about why our section was buying crap we didn’t need-they said that it’s just the way we had to do ‘it’. When I pushed and looked farther into it I found out about the ‘buckets’; each type of work or squadron had its own ‘bucket’ of money from the budget to achieve its mission. If the particular fiscal year actually cost less than was allocated, they were encouraged to spend the balance to zero. The rule was that if we didn’t spend it then we didn’t need it-and that money wouldn’t be there the next year. So when the next year actually cost more to operate and accomplish the mission, there wouldn’t be enough money in our ‘bucket’.
Every job required to accomplish the collective missions has years where more is needed to safely, and successfully do our jobs. The lesson that had been hard wired in the military was that if we didn’t use it, we lose it.
Really stupid.
The things we contract out for, everything from jets to coffee pots, prices are set by those companies out there. They want the best prices they can get for the contracts they fulfill. There are no actual watchdogs. Self-reporting or monitoring can’t work; why would anyone let go of funding now to save money when it is known that down the line the funds will be needed and no longer allocated?
It’s harder to get funded than it is to hold on to funding already authorized.
As a Marine aboard The USS Forestall. I watched navy dump Pratt & Whitney engines & tools overboard to help make the Navy budget for the next year
was "parts guy" while in--can confirm...spend or lose it OPTAR...if for some reason you did NOT spend before the fiscal end of the month----you would lose it next month with the mentality/policy of "you obviously did not need it so we will give it to someone who does"----this cause the "end of the month splurge".....I mean seriously I would end up buying "high end Pens for the officers" because they wanted it NOT needed it---nothing like buying Mont Blanc desk sets..oak desks because "The Commander wanted it"
You're so right. I was the RA for a few years and it made no sense that we had to purchase from set companies when we could get things more cheaply elsewhere. The end of the fiscal year was a free for all. "Who has a wishlist?" Next thing you know, a Foosball table for the break room because we desperately need to spend money 🙄
I remember that in 2008 between administrations when they cut the GWOT budget, everything you don’t spend you lose.
This happens in the fire service as well.
A recent video on the 60 Minutes channel (Military contract price gouging: Defense contractors overcharge Pentagon) drew attention to the rising and exorbitant costs of weapons and other items acquired by the Pentagon;
- In 1991 a stinger missile cost $25,000. Now in Ukraine war costs 400,000;
- Between the years of 2005 and 2020 the Pentagon consumed 14 trillion dollars and added 5 ships to the fleet. In the same period, China spent 3 trillion and added 117 vessels;
- Another problem is the decrease in the number of inspectors at the Department of Defense, a fact that has left companies freer to exploit the taxpayer;
- But these are not the only problems. Recently auditors discovered that more than 1 million parts of the F-35 jet have disappeared in the last 5 years;
- US officials seem to turn a blind eye to these irregularities, as plane costs continue to rise and the Pentagon continues to overpay for them;
- And there is one more additional cost to be remembered: in recent decades the United States has been involved in long, expensive and useless wars such as Iraq and Afghanistan, which also greatly worsened the country's image in the face of the so-called Global South:
- As a result, the United States is lagging behind in the technology race, as the Russians and Chinese already have advanced hypersonic missile systems that America lacks, and Iran's growing drone and missile force threatens the American presence in the Middle East.
ruclips.net/user/livemFS7IvYvv2o
Imagine just now finding this out
After nearly 40 years in the defense aerospace business, I saw a lot of the problems develop. As mentioned, the mergers and acquisitions that were encouraged and allowed to happen in the 1990's resulted in fewer major contractors and suppliers of critical parts. We have anti-trust laws for a reason and our government chose to ignore them to their own detriment. Some of these suppliers, like Transdigm, even brag in their annual reports to shareholders that the are the sole source for 70% of the items they sell and they can therefore demand high profits. Disgusting. (another cause of these high prices are the government's ridiculous specs, but that's a whole another story)
I wish common people understood this. If you're a small manufacture trying to land contracts is almost impossible. Not only do the larger companies keep acquiring smaller ones, they then have a monopoly with acquisitions. SBA/SDV programs really only help for larger companies to use them for the tax breaks. There is no way to compete on government contracts with the specs DOD uses, the suppliers know exactly what it is and what those contracts are fetching so the material is priced high to begin with. Literally can't compete with the big guys because they can afford smaller margins on some projects or to straight up lose money on a contract in order to make money on others. Our manufacturing sector is in BIG TROUBLE and nobody seems to really even be aware or care (Unless you're in the industry)
@@josh1800 should fix that but also there are foreign companies from Allie’s that could compete too. Sometimes it works (the new FREMM frigate), but mostly they have joint partner with a US one and all the same thing happens. But some stuff, just buy Spike instead of Javelin. Black Panther instead of Abrams. US companies are hurting exports because of the gauging.
@@TheBooban The only good thing that's happened to US manufacturing is the Berry Amendment. There's a reason why aircraft/military equipment is our largest export. We need to use a more European model utilizing tariffs to incentivize and rebuild American manufacturing across the board. The US has literally scuttled manufacturing capability by outsourcing to other countries. I couldn't even imagine where the US would be today if the Berry Amendment didn't exist.
"In Profit We Trust"
Isn't that what it says on our currency.
Once I had the US Navy shutdown an entire project because the plastic we were selling as bumpers for wooden piles outside a sub base wouldn't have 25 years of guaranteed UV resistance. When I asked for "proof" of which supplier promised 25 years no UV degradation on this plastic, I was provided with a photograph of a napkin from 1981 saying "No UV damage over 25 years". A napkin. From 1981. From some random salesperson. And the navy kept that and shut down a project because no modern/real supplier could match the napkin scribble.
This has been an issue for such a long time. I remember seeing a 60 Minutes show 20 years ago about how the Pentagon paid $600 for single toilet seats. Looks like nothing's changed. And I'm sure it won't any time soon. I wish there were more shows that focus on what can be done to change the negative issue, not just on the negative issue itself.
For those of us, who remember the Reagan Era... yes.... these are guys who want little to no government involvement... on the THINGS THEY WANT businesses to "excel in" usuing "supply and demand" metrics (as they themselves define what those metrics are.... but on things/issues they feel the government MUST regulate, such as human freedom to choose, etc, oh, boy... Clarence Thomas is busy 24/7 scheming ways to TAKE AMERICA back to the Puritanical Age of the 1800s, 1700s, 1600s, etc.
absolute proof great grandfathers, grandfathers and parents were all failures....and it continues.
Totally agree! This has been going on forever. Remember Star Wars under Reagan? The GOP has gotten much worse under Trump and McConnell.
Toilet seat that need to be of US material and have various tests and traceability with a fai.
A lot of it, is just all the add ons that come with a contract. Everyone has to get theirs. Competition is the only way to keep things in check. Competition will also result in better products.
This old chap should recieve a medal of honor and patriotism!!
Thank you.
Five of the nation's biggest defense contractors -- Lockheed Martin, Boeing, Northrop Grumman, Raytheon Technologies, and General Dynamics -- spent a combined $60 million in 2020 to influence policy, according to a new report from the Center for Responsive Politics.
The paper, "Capitalizing on Conflict: How defense contractors and foreign nations lobby for arms sales," details how a network of lobbyists and donors steered $285 million in campaign contributions and $2.5 billion in lobbying spending over the last two decades as well as hiring more than 200 lobbyists who previously worked in government.
Source: Military
At least 15 lawmakers who hold powerful positions on a pair of House and Senate committees that control US military policy have financial ties to prominent defense contractors that together were worth nearly $1 million in 2020, according to an Insider analysis of federal financial records. -Source: INSIDER
No surprise there! You can best believe there are many more politicians in DC on the Defense Contractors payrolls or holding large amounts of stock in those companies!
Thank you Mr. Santos
YES! Thank You! 🙏
All this time Tulsi Gabbard was correct. The defense machine continues to run things.
@@imds123she would know. She plays the game too. She recently admitted that she was in a combat role, drone striking in a country we are not at war with.
This is a common practice for all government contractors, not just in the defense industry. The fault lies in how these contracts work, and because you’ll be given less money if you work within or under budget. You’re practically rewarded for going over budget.
Well known fact for over 40 years.
Stealing is stealing.
Yeap, like biz traveling to places where work is done like to see an Orca jump and do tricks, and also overtime to watch paint dry.
Here is how you get that over budget reward.
All the overcharging is due to Government rules and connivance. We have strict accounting to insure that. The main grift was "contract change".
@@jjutt87 But it isn't stealing. All the overcharging is due to Government rules and connivance. We have strict accounting to insure that. The main grift was "contract change".
Thank you 60 Minutes.
Of course they are over charging, over half of Congress have stock in these companies
I was working in the VA and there was the same problem , but on the smaller scale- drug and medical equipment manufacturers also gauged the prices like there was no tomorrow. And then something unusual happened - one of the VA integrated service networks (VISN) was allowed to hire an independent contract negotiation team, which got paid on the contingency - I believe they got paid about 20% of the money they saved on the contract after negotiations. Well- maybe Pentagon needs to do the same. Hire an independent team which would scrutinize everything and have them find all the over-changing and price gouging since their fee would depend on the money saved for the DoD. With a lot of the DoD procurement personnel ending as the defense industry lobbyists and consultants , it could be one of the effective measures
do you think these military creeps and politicians care about saving money? Its like blood to them and they are vampires.
Thats exactly what I thought, incentivised audit of the whole system. Problem is that would stop the pentagon bosses getting their tasty little stock payouts from all the companies they claim to be fighting. Its no accident that the private sector has been allowed to completely monopolise because it still benefits the people at the top
was just going to say the same.
Best comment! Now how to get it done? These ideas shout make it the decision makers ASAP
12:51 The ultimate goal of capitalism is to get as much profit as possible. to create monopoly and imperialism
Happens in Australia as well. I needed a socket to do a brake adjustment for some equipment in a missile guided frigate and was told around $140. A dockyard worker overheard me talk about it and got it through his company for $35.
Yiiikes mate. I wonder how it campares then to here in Britain. I betting still both our countries are paying a loooot less for those though when compared to over in the States.
God they're nuts.
The US has a lot more equipment, that's why. And the US has much bigger equipment... The same with Canada, Saudi Arabia and all these countries.
Did the $35 socket meet mil spec? Does the contract require the contractor to use mil spec equipment?
@@anotherdave5107 And that's the problem, it's all the paperwork testing and inspection that goes with that tool that you can buy at home depot for nine dollars.
Does the same $35 part not need to meet specific standards? You certainly saved through another company but doesn’t the bureaucracy stop you from purchasing through non-government approved sources?
In 2001 "The Pentagram cannot account for a missing $ Two Trillion Dollars 😂"
At one point in my career, I traveled to San Diego fairly regularly. On 3 occasions, I randomly met people who "work" in the military contractor world and they all bragged about how much money they make doing almost nothing in the military complex. There is major corruption going on in the military contractor world and it has been happening for decades - it's just now reached a point where mainstream is recognizing it. One of the guys owned his own contractor company and he told me he has become a millionaire in a short period of time.
been known for over 35 years if not more by all mainstream media and they kept up the fear tactics and have NEVER given the public the control of the "purse" even though supposedly we elect people to Congress to control the purse
Yeah worked at a warehouse and only really needed like 10 people had 40, half just sitting around, discraceful
What bothers me is this is money which could have been spent on bettering the lives of the American people, no more tent cities or crumbling infrastructure. No need to ask how China has progressed so rapidly. They don't allow a small group to rip off government revenue.
@@ralphzoombeenie2330 oh trust me, they still have plenty stealing of taxes. and the thing is half their economy is debt, the feds tell the local leaders how much economic growth they expect and a lot of cities take out loans to start building projects just so they can say they made enough progress. sure they have made great strides but half their economy is a pyramid scheme of foreign investors and they have whole cities that are unfinished and empty. we certainly need a lot of change here at home, the last half century has just been a slide towards corporate rule
@@ralphzoombeenie2330 well, China’s quality control with construction has proven to be absolutely garbage and corrupt so they might not be the best example
This is a massive issue, if a candidate made this their primary concern, they'd have my vote forever.
They might be killed.
@@tonyrandall3146 Unfortunate auto accident !
Likely how JFK was wacked.
Weird. It's almost like a recent president had negotiated multiple defense program budgets to be cut... (And he's running again). If only people would pay attention
This is a total outrage.
Good reporting! Let’s see what comes of it
A very similar thing happens at the VA, where the medical device companies rake in a ton of money. The VA is not allowed to negotiate prices and has to pay "list price." Whereas the non-government hospital I work for can and does negotiate prices and pays a fraction of what the government does. So sad.
Along with “claim it, you earned it” mentality VA encouraging veterans…
🙋🏼
This is simply outrageous. I’ve never would think that my own country would allow itself to be taken advantage of.
really? you aren't aware of how capitalism is designed to work?..... where have you been? streaming Netflix huh, bread and circus
lol
@@gotem370 are you so thick skulled you can't tell OP is being sarcastic? lol you lost
you thought you're smart?
Senator Harry Truman, during WW II, led a price gouging investigation. President F.D. Roosevelt thought it wasn't necessary, we'll spend anything. The investigation showed major problems.
Truman was raised poor. Roosevelt was raised rich and never had to worry about money.
I'm startled "60 Minutes" said this problem started in the 1990's!
This is absolutely insane. WTF folks?
As a US airman currently stationed at a base with F-35s I can truly say contractors are ripping off the DOD. But military member who join the dark side are just smart! We see how unfair the pay is between us and contractors & we deserve better compensation.
As an engineer working in the defense industry. The biggest lever the government can pull is remove the qualification regulations, it’s so easy to design and build competitive parts! But qualification of the simple components takes millions and years to get approved. It’s the exact same as drug development, too expensive to fund competitors
what kind of engineer are you ?
That sound like a veeery dangerious thing to do over there in a country like America, BUT it also sounds look a very GOOD IDEA.
This is the perfect guy for the job. Kudos to him for being the most hated. He protects that our money the best he can and I bet you hear that accent outside your door in the pentagon hallways and it probably sends chills up generals backs. Good for him. This why civilian oversight is needed.
Not surprised by any of this at all, sad. Really enjoy watching the in-depth journalism of 60 minutes.
One of the newest technologies to be used on the 1st CVN78 Ford was deleted from the final design, because it was a sole sourced GFM item from a small firm that did not work. The USS Ford is now the only CVN with added permanent dead ballast located to compensate for impact on stability from the weight loss of not having the new tech system. Can't say what it was but it was a huge upgrade over Nimitz class.
A HUGE waste of our tax dollars.
I'm glad I'm in the lower part of the tax bracket
Not a waste at all if you think about it. These defense company CEOs work harder than anyone in the entire world perhaps, probably clocking in more hours every single week than any welder or warehouse worker I've ever seen. They deserve their private islands and super cars and sex slaves. One day I might be one of these CEOs and it will be because I worked super duper hyper domer hard, putting in 900 hours every week! They deserve what they earned. We shouldn't do anything about it.
@@grzyruth9205 we should also drop the minimum wage to 1 cent per month, then give the rest to ceos and politicians
@@squidwardo7074 here here! To efficiency!!🥂
@@squidwardo7074 EXACTLY! Finally somebody else gets it
The annual 60 minutes special on defense overspending. Nothing gets done because everyone's hand is in the till.
*because Congress is useless
Been happening for a long time. Eisenhower warned us about it.
If we can't even audit these these defense contractors, how do we know they are not selling this proprietary information to our competitors and enemies?
Being in the military many of us were shocked looking at how much things cost. Glad someone if finally pointing it out.
I go through this every day. Just went through contract negotiation with a major defense contractor. The standard answer from my superiors when I point these things out is: “they’re a sole-source OEM, what else can we do?” It makes me sick!
report them to the attorney general? Head of the defense auditing dept?
You can shame them.
If they can sue and fine the U.S. Banks billions of dollars, then the U.S. Govt can sue and/or fine these companies billions of dollars as well for price gouging.
Wait a damn minute…..does everyone have amnesia?! I’m 44 and I remember this being common knowledge that it happens with everything the Government buys. Not only in the defense side of things but literally with everything.
This is great reporting
ACCOUNTABILITY! ACCOUNTABILITY! ACCOUNTABILITY!
You can't just blame the contractors, you also have to blame our government officials for not caring and allowing this abuse (theft) at the tax payers expense!
Lol- Reaganomics!
Yup. The congress members who keep pushing for more funding are the ones who have stock in these companies
because government officials might be involved who knows, but I feel bad for taxpayers :(
It lands squarely on the contractors. You can blame the victim for being taken, and say they must be crooked, but the reality is they don't have a choice. They either approve budgets or they are replaced. Period.
That's how officials who get elected one year and become multi millionaires the next year are made!
I was a contractor and in the Army, I can assure you that the military is over spending 10 fold. I worked in a warehouse and there was a bolt 🔩 that cost $200.00. Ridiculous! That's just one bolt.
This is what President Eisenhower warned us about in 1960 before Kennedy took his place, he said in his speech "In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists, and will persist." he was right, these contractors are endangering our country.
“You don’t actually think they spend $20,000 on a hammer, $30,000 on a toilet seat, do you?” Julius Levinson
This has literally been going on for several decades. This could be avoided if our government wasn’t so obsessed with privatizing everything.
Where do you think the magical urge to privatize everything comes from? The defense contractors grease the palms of the politicians to keep the gravy flowing, all the while they keep arguing that the budget needs to be cut for food stamps, child care or education
I could not agree more.
Or use 3 contractors to make the same part. That contract gets reevaluated every 2 years.
Whoever builds the part with the lowest failure rate and lowest cost gets 50% if the contract and the other 2 get 25% each.
That could also mean that the F-35 would be built by Lockheed Martin as the Primary, Boeing as the secondary and Northrop Grumman as the 3rd company.
@@pogo1140 You are 100% right. This's what we've a been saying here in the UK for yeeears. And especially so over the past year when it comes to renewing stocks in your country with the current ones rightly going to Ukraine. Sooo many supplies, especially MLRS like the Javelin are taking foreeeveeer to be restocked (and I am SURE it's still happening) become they all come from one supplier who also has a manopoly on the price.
This's just so STUPID and criminal.
@@danielwhyatt3278 Yep, Patriot missiles were being built at 250 missiles a year, it's taken a year to increase that to 500/yr and 550/yr by the end of this year, and we are paying 30% more per missile than we should be.
It is ridiculous the the amount of money wasted on contractors and parts. When a vital part is needed, I’m blown away the cost. We’d always joke that we could go to Home Depot or Harbor Freight for 1000% cheaper.
But if you miss $1 on your taxes, you can go to prison.....
This is treasonous by the contractors and those involved all need to be put in prison.
Put half of Congress in there with them. They won't even ban themselves from insider trading, all complicit in the theft from the working class
They usually aren't doing anything unlawful. Competition is the only way to keep things in check. Competition will also result in better products.
@@nafnaf0 except where there isn’t any competition leading to unchecked price hikes
Finally some good investigative journalism
Still nothing will change.
😂
Didn't we all realize a long time ago that they were consistently grossly over-charged for everything?
A much older problem in the Pentagon is the inability to cancel projects that are failing. Programs like the F35 and the earlier Osprey, are managed by officers who are evaluated for promotion based on the successful completion of their project. 50 years ago, when I was in the USAF, I learned the saying " nobody ever got promoted for killing a Pentagon project." I heard it again later when working in the electronics industry in Silicon Valley. On top of that, these officers are motivated to go soft on the contractors because the relationships developed there lead to jobs with those same contractors after retiring from the military.
"War is just a racket. A racket is best described, I believe, as something that is not what it seems to the majority of people. Only a small inside group knows what it is about. It is conducted for the benefit of the very few at the expense of the masses."
Smedley Butler
*Major General Smedley Butler, the most decorated US soldier in history. Among other achievements, he exposed the Business Plot, where wealthy industrialists were planning an military coup to overthrow FDR. We should all take his words to heart.
war is a method of Racking in profits
I don't know what the current situation is but I had a good friend while living in England who owned a salvage/wreck yard which specialized in US vehicles back in the 1990's. He had a pass to enter practically any US base in Europe which he would regularly visit to purchase damaged military vehicles for pennies on the dollar. He stated because their vehicles had no insurance when they were damaged however lightly they would be parked up and replaced and sold to whoever like himself knew the right people to negotiate with (usually the base commanders) to acquire them with clean titles. Most he would drive back home vehicles with less than 10K miles with broken windshields and complete with all their medical equipment (like ambulances or fire trucks and buses) and sell them at huge profits or rented them once repaired to Hollywood production companies making movies in England.
The type of reporting that needs to reach all Americans. Fix our military spending!
This is exactly what President Eisenhower warned us about.
These companies should either be nationalized or the leadership should be locked up. We should be able to sue these companies into the ground until this stops.
Nationalized? Are you kidding? I am a federal employee so I see how the government works daily. Would I want a company run that way? Heck no!
I'M WITH YOU MIKE!!! YES SIR!!
Well you can't just "nationalize" companies at will. It is both highly illegal and unethical, price gouging or no. Simply address the issue of overcharging instead of calling for illegal, childish, power fantasies.
They are in a way, but the WORST way. They are publicly declared "strategic producers"....meaning that we will never allow them to go bankrupt, no matter what. That's why this is allowed. It's sickening.
If companies create monopolies in the defense sector and use that to systematically overcharge taxpayers then nationalization is a completely reasonable response. Not least as a warning to other companies that try similar things. There is no reason to respect the rights of companies that actively undermine the free market.
Reminds me of that scene in Independence day when the President asks
"where's does funding come for all this???!!!"
and Julius says...
"you don't really think they paid $20K for hammer or $30K for toilet seat... DO YOU?
Bingo
Unacknowledged projects.
@@jerrypanela, Shhhhh we don't speak of the Black Budget here, if people on this thread really knew of the over spending on Black Projects that money gets poured into then these projects get canceled after spending millions if not billions in R&D . In total over 60 billion in spending in 2022, but the funding from the Black Budget is a whole other rabbit hole to go down .
Wow… that’s an old movie now days, and this problem was even mentioned there?
That's also what I thought too. Black budgets.
I've been hearing stories like this since I was a kid. So nobody is serious about stopping this. It just makes good fodder for the new stories being peddled by multinational corporations, some who are UNDOUBTEDLY, owned by defense contractors. Like NBC.
Controlling price gouging by defense contractors involves implementing effective measures and regulations. Here are some potential solutions:
1. Competition and Transparency: Encourage competition among defense contractors by promoting transparency in the bidding and procurement process. This can help prevent monopolistic practices and foster fair pricing.
2. Strong Contract Management: Enhance oversight and monitoring of defense contracts to ensure compliance with agreed-upon terms and pricing structures. Regular audits and reviews can help identify and address any potential price gouging.
3. Cost Estimation and Benchmarking: Develop robust cost estimation methodologies to determine fair and reasonable pricing for defense contracts. Benchmarking against similar projects or industry standards can provide a reference point for evaluating prices.
4. Negotiation and Price Caps: Engage in effective negotiation strategies to obtain fair and reasonable prices. Implement price caps or price adjustment mechanisms to limit excessive price increases.
5. Long-Term Planning: Encourage long-term planning and stable funding for defense projects to reduce uncertainty and prevent last-minute rush orders that may be vulnerable to price gouging.
6. Collaboration with Industry: Foster collaboration and communication between government agencies and defense contractors to establish a shared understanding of pricing concerns. This can lead to mutually beneficial solutions and improved cost management.
7. Enhanced Oversight and Penalties: Strengthen regulatory oversight and enforcement mechanisms to deter price gouging. Implement penalties and consequences for contractors found engaging in unfair pricing practices.
It's important to note that controlling price gouging is a complex task that requires a multi-faceted approach involving legislative measures, effective governance, and cooperation between the government and defense contractors.
I completely agree with every one of your statements, however there is an 8th and 9th point I would like to add.
8. Specification Simplification. Either allowing sole sourcing new supplier simplification when supplier meets known best practices previously noted (including hitting pricing estimates) or broadening specifications, and prioritising requirements. For example, its this colour because everything else is this colour, and it was some paint we got down home depot, or this paint has this very specific stealth technologies, but we don't care about it's viscosity.
9. Harmonisation with Industry standards. One of the commenters noted that their stock was simplified to a pack of 5 items for 75c and the whole gamut of industry could deal with this. However DoD purchasers needed 4 or 6 (in just the same way as the rest of the industry), but forced repacking and new sku's and so the price was $20, instead of discarding unused items from 1 or multiple packs of 5.
This is the military industrial complex working as intended. A feature, not a bug.
We must hold our elected officials accountable.
1. This has been going on for decades. 2. Anyone who has ever been anywhere near government has always known this to be the case.
Think about our Congress debating a debt ceiling.
Now think again.
I come home from work uncertain about the affairs of the world, but I sleep easier knowing THE TRUTH, and being more prepared for tomorrow, armed with information that’ll better my decision making. Thank you for what you do, from a fellow American in the California.
wonderful journalism!
Its a good topic and I'm happy they are reporting on it. However, they could go very much further and do not. CBS is very happy when we go to war. They make huge profits off driving us to war and reporting it, so technically they are part of the issue. They have the money to uncover crazy stuff, and do not do so.
Corporations that do price gouging should be put in the spot light and be taken accountable
It is all done according to regulation. All the overcharging is due to Government rules and connivance. We have strict accounting to insure that. The main grift was "contract change".
@@msimon6808 Why would the government make rules to rip itself off? That doesn't make sense.
@@robertmorin6495 it's the same group of people making the rules going through revolving doors.
Of course they should. First we need competition to them as they are the only suppliers for crucial weapons systems.
Why it's absurd that corporations have been given personhood, when they aren't held accountable like people.
When the number of primary military contractors drops from around 50, as during the nineties, to 5 today, the opportunity for price gouging increases. It's an inverse relationship.
It was insane seeing the prices we would pay for standard bolts, tools, and general maintenance material while I was in the Marines. Sometime several thousand dollars for plastic fittings wrapped in heat shrink.
Pretty sure the politicians are involved with this. Send them all to jail!
Have been for decades. They receive financial kickbacks from these corporate contractors, it’s a vicious cycle that never ends.
For sure!...Kickbacks and corruption rule the world...sadly said!
They are. I’m working an aircraft that was mandated for the military to buy. It’s horrible! The build quality is that of a hobbyist nature and it’s the worst I’ve ever seen.
Damn right!
Everyone in Congress can use their knowledge of legislation about to be passed, to invest in those areas. In particular, many reps and Senators buy stock in defense contractors, so the more that's voted into the defense budget, the more they make.
I'm glad this is getting picked up, when I was in the service this was one of my main concerns, I saw how much we paid for equipment and how little we used it, and how little we did know how to use it. It was like a giant junk hoarding scheme at the expense of the taxpayers. Kinda realized that I was contributing to a systemic issue that was hurting more people than it was supposed to help. I think we have a corruption issue going on between government and military contractors, and that we need to pay more attention to this.
About time you do some good reporting
This alone puts us behind on technology we need. And could cost us the entire country and future if we are attacked. I hate these companies now.
Im surprised that they put this story out. It’s actual journalism for an actual problem
I worked in 2005 for Lockheed Martin in Ft. Polk, La. We rebuilt Humvees in my particular Motor pool. We received the parts in huge boxes brought to us on forklifted pallets. We had to inventory and account for every part, including down to single nuts, bolts, and washers. The price the Government paid for each was listed, and it was disturbingly disgusting. A single, tiny washer, was over $5.50 each.
Edit: For context and comparison, a single washer of the same size will cost roughly a dime at Lowe's or Home Depot. A dime washer, Government paid over 5 dollars for. 🙄🤦
Wtf 😳 why can’t the govt just buy the the washers, bolts etc straight from Lowe’s rather than going through 3rd party contractors??
@@BLACKAAROW The military industrial complex, lobbying, and corruption is why.
@Leviathan88 because the manufacturer told them it's only parts that can be use in the vehicle.
As a commander, if you decide not to use their parts, and something happened to the vehicle because of it, you will be held responsible. Most likely lose your command, force retirement or worse get kick out of military.
Now this is journalism. More of this!
Years ago, we thought this was happening but stopped our thoughts because we could not believe that people could do this. Today, we know this is happening. We are now disillusioned but not surprised.
A close friend was employed by the nation’s largest military contractor from 1961 until he retired in 1997. He started as a subcontracts analyst, then became a contract analyst, until he was promoted to being a contract negotiator. During his career he was constantly shuttling around between dozens of contractors in order to get the best prices on components. He was away from home and flying around the country for weeks at a time, always trying to get the best prices on the components they needed to procure, from any number of subcontractors who were also competing to sell their latest offerings. What he put together in the end meant the difference between winning a competitive bid or not!
Anything that was tasked for design, development, and engineering by his employer was closely monitored by government auditors so the government knew exactly what they were paying, and what they were getting in return for their investment.
Still, his employer was under constant scrutiny by the government’s auditors so that any cost overruns were accounted for absolutely, or else the contractor would not get paid more than what the govt auditors assessed as the fair price, allowing for the costs of engineering and development, plus a fixed profit margin of 10-15%. A healthy ROI!!
Occasionally the govt needed something done in a hurry and was willing to waive some cost overruns in order to get those items as soon as possible, but the profit margin was still capped at its usual rate. And if the contractor could deliver the items needed before a certain date (tested and certified), the contractor received a bonus for their efforts.
But the auditors were still there every step of the way, constantly evaluating every possible factor and making sure they only paid for the items contracted, and they scrutinised every financial transaction in order to ensure that contracted costs they budgeted for stayed inline.
There was a lot of competition at the time, and companies rightfully needed to make a profit for their work. So the govt auditors had other contractor’s bids to compare costs… Which had to be broken down into every detail from design and engineering to testing and making any necessary modifications and improvements, to assembly and manufacturing, plus final tests for certification to mil-specs!
Everything was very rigid since these were military components and couldn’t be lacking in quality and reliability because lives depended on these components i.e. Failure was not acceptable and could cause a contractor or subcontractor to lose their military certification!!
I was always impressed by how well the government oversight kept a tight reign on costs and didn’t hesitate to drop a contract if cost overruns were repeatedly excessive, because the govt had a multitude of other contractors they could turn to if that ever became necessary! But that was during the late 1970’s.
Currently, I don’t know why the government and our military would let the American taxpayers get cheated out of so much money, because they’re only shortchanging our military’s strength and effectiveness, and at the times where we need to be at our best, with 100% reliable readiness. Their greed is transparent to the rest of the world, which is probably to most disturbing aspect of our military. And contributes to our armed forces inability to attract quality people willing to serve!
The fact that lobbyists and corruption has taken hold of our congress and military procurement officials is proof that these auditors need to be brought back with the order to fix the system or else resign, and we’ll hire the right people who are willing to get the job done!! If my friend was still alive- he would be appalled at the lack of oversight that has led to all this runaway spending. His solid integrity is what I admired most about him!
There was a time our military or government could put up a certain item for bid and at least 4-5 contractors were there with their sealed bids, and all hoping to win that contract! Those days are gone due to Reagan’s downsizing and removal of the people responsible for rooting out these massive cost overruns… As if a for profit corporation isn’t going to do what’s in THEIR best interests, instead of making sure we have a continually healthy military budget, and the best equipped soldiers in the world. And now the GOP wants to slash our military budget (and veterans care). But nothing is said about rooting out the corruption that has led to price gouging and redundant spending!!
Threats to defund the Ukraine war will only expose our NATO allies to a higher threat level, which in turn will immediately escalate our need to possibly become directly entangled in their war… at a time when we can still help them fight and succeed, yet maintain our readiness at 100% should the need arise to defend Taiwan and any other countries China would seek to exploit by our weakness and unpreparedness.
During WWII, the Korean War, and into part of the Vietnam war, all heavy munitions were made at military weapons manufacturing depots… which have all been closed (except for most of our nuclear weapons facilities). The manufacturing of heavy munitions has been completely privatized, which has allowed for the astronomical procurement costs we’re now seeing! Plus failures of so called “smart weapons systems” has never been higher, which is evident of cutting corners on materials used, parts quality, plus a lack of testing for quality control and quality assurance. These failures cost lives!!!
Many of these weapons manufacturing depots were on military bases, and most are still there… just sitting idle. So If we’re still paying for the design, development, and manufacture of these new weapons systems, get rid of these extravagant middlemen and take back our own munitions manufacturing once again.
It’s time to make these budgets lean, but the only way is to cut out greedy profiteers and restore oversight both internally and externally to military contractors who started on their own from the ground up to build the larger aircraft and military weapons systems we now have because of their partnership with the US government and our military. But their cost overruns are inexcusable and this is what warrants the return of a new department of auditors and cost analysts, otherwise this excessive spending will continue to go on unchecked, while our military defense and preparedness suffers, and in full public view!!
Cool story bro 😎
Great read. Thank you.
Thanks for sharing your extensive experience.
I saw a lot of things in the segment that concerned me but at the same time they mentioned something about 12% profit. 12% is not out of line and it actually sounds kind of low to me.
When they talked about how much money the companies make they didn't mention whether or not that includes research and development and other expenditures or if it's just the cost of manufacturing. The segment left a lot of important details vaguely explained if at all. Knowing the bias of this network I'm skeptical that they painted an accurate picture of the situation, but at the same time I'm not completely dismissing it. I think there were a lot of good points to be concerned about.
I ain't reading all that but, damn that's crazy
I'm a career CPA Auditor with for profit companies, but had a stint at a DoD contractor as the internal audit chief. So I interfaced with these government auditors, Defense Contract Audit Agency (DCAA). When an accountant finishes college, the people with personality and brains go to accounting firms. The people with hard work ethic go to companies. The barely squeaked by people that were in class but had nothing to add, they went to work for the government. These DCAA are the least thinking accountants I have ever met. They have no understanding of risks, basis for estimates, or what is reasonable. So, don't count on these auditors to find anything of value, they are useless.
And shame on the Defense Contract Management Agency (DCMA) for signing these contracts. They are the reason companies are allowed to charge what they charge.
There's a fine line between being a free market capitalist and a traitor.
What about the!r shareholders?
@@pietrojenkins6901 if they care more about profits than national security.
It happens in the construction business as well, "it's a government contract job" so prices and wages for that job go way up..
Keep the money at home not corrupt Ukraine!