From: Steve Grammont (islander@midmaine.com)
Date: Tue Aug 26 2003 - 12:19:20 PDT
>Then I think the point is wrong!
I think it is wrong in this case, but overall I think it is correct.
>The right point is, if a civilian contractor wants to
>do business with the government, then they don't
>engage in "protectionist practices" at the cost of
>squandering taxpayer money. They play it straight or
>take a hike.
You obviously don't understand how economics and industrial realities
work. Government needs certain things that are *not* viable as
commercial products. These contracts are awarded only every so often and
the producer has no assurances that they will be selected for the next
one. They also can see their contracts canceled or curtailed depending
on the budgetary decisions made by Congress. To not understand the
impact this has on a company is to not understand the fundamental
realities of doing business with the government.
Like I said... if my company was to not receive assurances that our
product would be kept within the military, fine. We could agree to that.
But the government would then have to foot the bill for all the consumer
sales we would lose through the arrangement. That means probably an 8
fold increase in what we charge the government. If they don't like it,
they can go get it from someone else. But that contract will have the
same exact concerns, so it won't likely happen.
So, would you rather that the governement pay 1/8th for the same product,
or the other way around? I think what we are offering the Army is dirt
cheap. In fact, I saw a room full of brass and senior civilian's jaws
drop when they heard our price. They asked why so cheap... and I said
because they won't screw with our ability to sell to the consumer. One
guy asked what if they did, and we said the price would be 8 times
higher. They understand this and agreed to it. Unfortunately our money
was syphoned off for Iraq, so we have to wait until the next cycle.
>I believe the gov. totally holds the cards on this
>one.
Not true at all. Industry has always, and will always, hold the cards
when it comes to customized items. If the government needs something
particular, and industry doesn't want to do business under those
conditions, what is the government going to do? Go down to Walmart or
Big City Dodge and Crystler and buy what they need? It doesn't work that
way now and never has. A compromise has to be struck so that gov't gets
what it needs and industry can make a reasonable profit. This, BTW, is
in the best interests of national security since when the crap hits the
fan we need these guys around to fulfill unexpected orders pronto.
Afghanistan caused a lot of problems for logistics, particullarly ammo
production, because the Clinton admin and Congress had forgoten that part
of what we taxpayers pay for today is the assurnace that we can buy it
tomorrow. And that does come at a cost, as it does in the civilian world.
>Bottom line: If the military wants to sell whatever
>surplus vehicles they have, it's not the g-damn
>business of the manufacturer to dictate government
>pollcy.... this ought to be up to the people who pay
>for it.
As a taxpayer I would rather have the stuff cost the gov't less up front
and have restrictions than to have the items be puchased at true cost without.
>Corp. greed is no substitution for what is best for
>the country. Selling surplus makes sense. Besides, I
>seriously doubt the corp. concerns were realistic. I
>don't believe a surplused HMMWV would affect the sales
>of the DUMMER, this is like mixing apples with
>oranges, two different markets entirely!
This is the one place I agree with you. I don't think AM General really
does have to worry about beat to crap ex-military Hummers getting in the
way of their luxury SUVs.
>But then this is all just my opinion, what do I know?
Well... in terms of economic realities of doing government contracts...
not much :-) And that is putting you firmly in the vast majority of
people out there, so no hard feelings. You should just understand that
you don't know much about this and therefore your opinion is not a very
well informed one. Mine is probably not that much more informed than
yours when it comes to the specifics of AM General's contracts with the
miltiary, but I do understand how things work in the real world a bit
more than you do.
NOTE -> my comments are strictly related to speciality items, which are
basically custom made for the US Govt's needs. Run of the mill
paperclips and lightbulb type stuff does not apply one iota to what I
described above.
Steve
P.S. I am no lover of industry and think that, by and large, the
consumer/taxpayer gets screwed by both industry and government on a daily
basis as a matter of routine. But I am not blind to the true needs that
this greed often takes advantage of by riding on top of.
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