Klarinet Archive - Posting 000475.txt from 1998/06

From: Bill Hausmann <bhausman@-----.com>
Subj: RE: Re: [kl] Plastic Clarinets (way off topic now)
Date: Sat, 13 Jun 1998 00:31:28 -0400

At 08:44 AM 6/12/98 -0700, Kevin Fay wrote:
>Sigh again--the ubiquitous $200 toilet seat.
>
>This is a classic in "how to lie with statistics." It sounds ludicrous,
>unless you have an understanding of government accounting--which is very
>much unlike commercial accounting.
>
>Here's the thumbnail. Most gov't procurement is done on a cost plus basis.
>They buy a list of stuff at cost, plus a percentage profit. If you have a
>list like this (vastly shortened for illustration purposes):
>
>1 aviation toilet seat.
>1 aviation coffee maker.
>1 Boeing 707 AWACs aircraft.
>
>The total cost is added up, and a percentage added to the overall purchase
>order. When the supplier cuts the invoice, an equal allocation of profit is
>often put on each item--so the toilet seat appears to be a stupid deal at
>$200 ($14 plus $186 profit). No one ever mentions that the 707 was
>purchased for $186 over cost, though. In fact, Boeing has made their %
>profit on the overall deal, which usually turns out to be a pretty good deal
>for the gov't--they are the biggest customer around.
>
>I sell software for a living--used to sell trucks (big ones). Having
>negotiated billions of dollars of sales contracts over the years with all
>kinds of customers, I don't see that the gov't does so bad on the purchasing
>end. They are quite often the customer who gets the very largest discount.
>
Not to mention that things like the "toilet seat" are not what you normally
think of at all, but a custom-fitted piece that covers the entire aircraft
toilet, the wall next to it, etc., that must be hand made in very small
numbers to fit only that SPECIFIC model of aircraft. I suspect the
government does quite well when buying "off-the-shelf" items. But the cost
of special items, and the admittedly ludicrous amounts of paperwork
involved on the part of both the government and the contractor, makes for
ample, if misguided, opportunities to cry "foul!"

Bill Hausmann bhausman@-----.com
451 Old Orchard Drive http://www.concentric.net/~bhausman
Essexville, MI 48732 http://members.wbs.net/homepages/z/o/o/zoot14.html
ICQ UIN 4862265

If you have to mic a saxophone, the rest of the band is too loud.

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