Obama '08?

@cicerone imposter,

The last paragraph on this link seems to confirm that KBR was provided the contract through the bidding process. I stand corrected. http://www.globalpolicy.org/component/content/article/168/35955.html

However, there's a "but" to this whole issue; KBR is believed to have over-charged the US government by billions: http://www.cbsnews.com/stories/2009/01/08/cbsnews_investigates/main4708097.shtml

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@cicerone imposter,

With respect to "overcharges" there is more to this issue than I expect you and many others understand, cicerone. The federal government audits the books of all of its contractors on a roughly annual basis. The purpose of these audits is to determine the maximum rates for labor and other services the contractors can charge. The government auditors routinely throw out numerous entirely legal overhead expenses, deeming them "unallowable" and therefore not accepted in the rates the company may charge the government. Unallowables include many things like entertainment expenses and political contributions, as well as other continuing elements of business such as interest expenses or losses in related operations.

The government will not allow any contractor to it charge more than these audited rates, though it encourages competitive situations that get it prices below them. In addition the government audits individual contracts to identify any potential overcharges relative to a very long list of constraints and prohibitions built in to all such contracts. Frequently cases of undercharging are also found, some involving wrongful action on the part of government contracting officers. However, though the government is zealous in collecting any detected overcharges, it makes collecting on its own wrong actions exceedingly difficult.

Though not allowed, the "unallowable" costs are real and continuing. In effect private sector customers pay for them.

Government often pays too much for the services it buys, but most of this is the result of its own mismanagement of the operations it pays for; demands for excessive paperwork ; incessant micromanagement of contractors; and frequent changes in its requirements.

Commercial buyers take a very different approach. No audits; they specify the result they want; use competitive bidding; and leave the contractor to either deliver the goods or fail.

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@georgeob1,

But this part of the report is still bothersome:

Quote:

“The basic situation was that the army through [the Defense Contract Audit Agency] thought the contractor had proposed at least a billion dollars in costs which they could not support,” Smith told CBS.

As a one time auditor, I find this going beyond your explanations for cost overruns.

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@georgeob1,

I have in the past worked for an Army contractor working on a cost + contract, and your summation reads like it is from fantasy land. The only part that you have correct is the government mismanages the contract, however instead of excessive oversight it is far too little oversight.

The military contract supervisor staff was cut a great deal under Clinton in order to save money, and because the military was shrinking and because the Clinton admin had a wild hair about public/private partnerships and how to encourage them was to show that you trust the private company.

Then the Bush admin cam along and gutted the oversight of contracts, because they were peddling contracts to their friends and wanted their friends to make as much as possible. In Iraq we routinely had contracts where 30-40% of the cost was out and out wasted or stolen. the contractor then got paid for almost all of the claimed costs no matter how outrageous and undocumented, and then took a profit above that as well.

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@hawkeye10,

As a matter of fact, I remember long before Clinton or GWBush, government contracts paid $500 for a hammer and/or toilet seat. That kind of waste was common practice and knowledge.

I'm sure those cost plus contracts still happen on a regular basis without regards to cost control or efficiency.

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@cicerone imposter,

chump change...in Iraq we had $1 billion + contracts for Iraq rebuilding that never accomplished a thing more than spreading some money around, and high priced KBR electrical work on the bases that was so poorly done that our soldiers are getting electrocuted to death.
http://www.armytimes.com/news/2009/02/ap_kbr_contract_020709/

1 Reply

@hawkeye10,

I remember reading about those soldiers getting electrocuted to death; that alone should be charged with crimes, and that was pretty recent.

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@cicerone imposter,

cicerone imposter wrote:

As a matter of fact, I remember long before Clinton or GWBush, government contracts paid $500 for a hammer and/or toilet seat. That kind of waste was common practice and knowledge.

I'm sure those cost plus contracts still happen on a regular basis without regards to cost control or efficiency.

The quality of the reporting on these issues isn't much to brag about either.

The defense Department adds very substantial and only loosely related services to its weapons procurements - that contribute significantly to the overhead markups on the items they buy on them. The famous "toilet seat" of the 1980s was in fact a complete toilet/lavoratory unit like those in airliers for installation i the P-3 patrol aircraft for the Navy (now with female crewmembers it was needed). The markup on the price included management costs for the continuing engineering program for the P-3 aircraft. The price was actually $600 and it was comparable to what airlines then paid for the same article.

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@georgeob1,

And those $500 hammers?

Quote:

Paula Zahn Now (DOD Mismanagement) PDF Print

CNN

SHOW Transcript: PAULA ZAHN NOW 20:00

November 7, 2003 Friday

Paula ZAHN: Now on to that story on Pentagon spending. We're just learning this week that, over two years, Pentagon workers have spent up to $80 million for unauthorized first- and business-class plane tickets. That's according to a Government According Office report. And we are putting that into focus tonight.

Joining me from Chicago is Democratic Congresswoman Jan Schakowsky of Illinois. She's one of the lawmakers who requested the report. We are also joined from Madison, Wisconsin, by Chellie Pingree, president of the public advocacy group Common Cause.

Welcome. Glad to have both of you with us this evening.

Thank you, Paula.

ZAHN: Representative, let's talk about this figure, more than $80 million in unauthorized premium travel, first-class travel, business-class travel. How can that be? And why wasn't this caught earlier?

REP. JAN SCHAKOWSKY (D), ILLINOIS: Well, this is just one example of gross financial mismanagement at the Department of Defense, at the Pentagon, who can't account for $1.2 trillion -- that's with a T -- trillion dollars worth of transactions, cannot pass an audit, cannot balance its books.

Every time we shine a light -- this is the sixth investigation that we have done. Every time the GAO shines a light on it, we find this kind of abuse, waste, and fraud, violation of rules.

ZAHN: Why?

SCHAKOWSKY: Well, there is very little internal controls, poor mismanagement, poor management operations, no accountability, no systems. They didn't even know how many people had been flying first- class or business-class. The GAO had to discover the numbers.

If any business operated in this way, they'd either be bankrupt or they would have to fire the management. This is a systemic culture that is going on. We found that -- in other credit card abuses, that people were buying Louis Vuitton bags and spending money at strip clubs, and all kinds of things that are going on. So this use by senior officers and Pentagon officials and presidential appointees of first-class travel has now amounted, we think, maybe more, even, $80 million.

ZAHN: Wow.

Chellie, you're in contact with lots of military families. And as they hear about this egregious spending, and their loved ones are risking their lives, many of them in Iraq right now, what do they tell you?

CHELLIE PINGREE, PRESIDENT, COMMON CAUSE: Well, we've been asking them to send in their stories. And we get e-mails from the mothers, grandmothers, families of soldiers over there, who we know are risking their lives.

When they come back for their leave, they're dropped off in Baltimore and told, get your own plane ticket home. We had a letter from a mother of a son who had to pay $800 for his own ticket on military leave. One soldier -- there are 40,000 soldiers in Iraq who don't have proper military armor, protective armor to wear. We got an e-mail about a soldier who was shot. And they didn't have a replacement ceramic piece for him. He flips a coin every day to decide whether to put it on the front or on the back.

These are true stories. And the egregious violations going on here of thinking that people are living in first-class, when our soldiers don't have adequate equipment and have to buy their own plane tickets, it's just hard to put this in balance, especially in the debate that just went on around the $87 billion. Taxpayers want to think that their money is being spent wisely and that our soldiers are really being taken care of. And it's really just the opposite.

ZAHN: Congresswoman, let's put up on the screen some of what the Pentagon is now saying -- quote -- "The Department of Defense takes very seriously any questionable spending. Any unjustified expenditure diverts funding vitally needed to sustain U.S. military operations and other pressing priorities."

I guess you thought, 20 years ago, the era of $600 toilet seats and $500 hammers was over. Is it?

SCHAKOWSKY: I can't begin to tell you how often we've revisited these issues. And while, each time, the Pentagon says they're going to solve the problem, it doesn't get solved.

They're -- while our soldiers are lacking this Kevlar body armor, there's $30 billion in excess inventory at the Department of Defense. There are billions of dollars worth of equipment, including weapons systems, they don't even know where they are. And so this is a problem that needs a dramatic solution. In fact, I'm going to introduce a piece of legislation that says the Department of Defense cannot get any increase in its budget until it balances its books, tells us where the money that they're spending is going.

ZAHN: Well, these figures shocked a number of us who saw them for the first time.

ZAHN: We appreciate both your, Chellie, joining us, and Congresswoman Jan Schakowsky as well.

SCHAKOWSKY: Thank you.

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@georgeob1,

my brother a engineer with a NASA major contractor (welfare queen) could never figure out why a hammer was as cheap as $500. The auditing required for a simple pair of tongs for his lab (plutionium) required multiple hours by multiple employees (other engineers) to allocate costs was quite amazing. He assumed costs would excalate a hammer to well over $2000 each. Every lift-off from florida required he spend months living in a motel at the cape (just in case he might be needed along with 24 hour "escorts" he could not go to the "potty" alone let alone go out for lunch) he was just a simple working engineer.

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@dyslexia,

Interesting. NASA has very rigorous quality assurance programs. These are a necessary feature of their high risk activities. It would be very difficult, after the fact, to rationalize the loss of a multi billion dollar space vehicle as a result of the failure of a very low cost small component. Thus cost savings on such components are not a high priority, particularly if they involve any increase in the risk that they will fail.

It is very difficult to apply such policies with wise selectivity, however appropriate that may be, in any large organization. It is even harder in a government organization, where there are numerous constraints on procurements of all kinds, presumably designed to ensure the process is always "fair". Frankly, it isn't easy for even the most talented and hard working government employees (sadly a minority) to navigate their ways through the thicket of often contradictory rules they face.

(However contemporary zealots firmly believe these same bureaucrats wiull suddenly out perform their private sector counterparts in managing health care services.)

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@georgeob1,

Quote:

(However contemporary zealots firmly believe these same bureaucrats wiull suddenly out perform their private sector counterparts in managing health care services.)[/quote) over reaching George, way over reaching.

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@dyslexia,

What is the objective basis for your assertion that my point re health care is invalid or constitutes "over reaching" ?

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@dyslexia,

I must agree that the comparison was an insult to our intelligence.

And of a high order.

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@georgeob1,

georgeob1 wrote:

What is the objective basis for your assertion that my point re health care is invalid or constitutes "over reaching" ?

"out perform" is over-reaching, the idea of "health reform" letting alone whatever might be the Obama plan, "health reform" should mean that everyone gets aequate haelth care. I certainly believe everyone should get 'adequate health care".

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@dyslexia,

dear George, 3 nights ago Lady Diane had an episode of anaphaltic (sp/) shock and called 911, when they arrived she had to make a decision on going to the hospital based on if or not her health insurance would cover such a diagnosis. that's just wrong, she could have died without a realitvely simple intervention, she was home ande healthy within hours but her decision was based on her health care coverage insurance rather than her simple need.

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@dyslexia,

I believe that the majority of Americans want health care reform, but any expansion in the plans must also have cost savings included to make sure insurance premiums do not continue to escalate at the same rates as in the past decade. It's just not possible to continue spending a greater part of our GDP towards health care while less and less people are covered. It also hurts our competitive advantage in the world marketplace when US companies must cover the cost of insurance with almost all industrialized countries that have universal health care. That doesn't take a rocket scientist to figure out - or shouldn't.

There are many areas of cost savings to be had; most countries with universal health care already have them, and there are many hospitals in the US that have implemented efficiencies into their operations to save cost. It has been found that the US spends too much on x-rays, radiation treatments, unnecessary lab tests, MRIs, overblown inventories, lack of disease control, and drugs. Some of the more common areas of savings can be found in the following areas:

Quote:

- Decreased the length of patient stay by about half a day and reduced costs to the hospital by $655 per patient.
- Reduce the risk of re-admitting a patients
- Improved coordination by increasing the strength of communication and relationships between physicians and other members of the care provider team.

There are many more areas where cost can be eliminated or reduced. I have listed some of them several months ago on this thread.

Any new UHP developed by congress should have them included as part of any plan that is implemented. A universal health plan doesn't necessarily mean a cadillac plan for 100% of the people. Some coverage should be optional to the patient, and rates should be based on a) income, b) choice of health plan, and c) competition.

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@cicerone imposter,

yeah, what does an RPG cost and do you care? 2.3 billion per year to provide for afghanistan corruption, so it goes?

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@cicerone imposter,

Market forces could be counted on to limit wasteful practices by physicians. However, the simple fact is that the payment mechanisms used by insurers and Medicare/Medicaid provide payment based on individual services, and not treatment of the medical problem per se. Patients faced only with copays have little incentive to avoid cost. Moreover, on those occasions when insurers balk, based on the average statistics for treatment modalities, they are pilloried as greedy profit-motivated villains. Some HMOs (like Kaiser Permanente here in California) have a very good record for patient care and relatively low costs. Their operating formula does provide strong incentives for preventive care and the reduction of unnecessary costs. However, for all insurers and consumers of health care services our runaway tort system and punitive damages work systematically against any mens of inserting cost consciousness into the process.

Many folks would be well-served by insurance coverage that covered only catastrophic or hospital-related care, leaving routine services to the patient to pay. Unfortunately such policies were excluded in the recent Senate draft legislation.

The worst defects of our current system arise from the absence of market forces in the patient care giver relationship. The notion that we can solve this problem through government oversight and management is based on the rather dubious principle that the clumsy hand of government can somehow do a better job.

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@georgeob1,

I do not believe I have ever advocated for our government to take over health care. I know that even under Medicare, most patients never see the real cost of service, and are not concerned about "cost." This is a huge mistake, because it takes away cost control by the consumer, and leaves the fee haggling to be done between the hospital/doctor and the government.

On my recent visit to Austin, I had blood in my stool, so I called Kaiser for advise. They told me to go to emergency right away to have it checked out. I spent about two hours in the emergency room, and the bill sent to Kaiser was over $1,300. Kaiser paid the Austin hospital less than $200 and the rest were written off as a "courtesy adjustment."

If I had to pay $1,300, and knew what the cost would have been, I might have skipped the emergency visit.

These are issues that must be addressed when they develop health plans for this country. The consumer must be provided the information on cost, and should have to incur some co-pay for services to reduce abuse of the system.

I'm very happy with Kaiser, and my physician is the best I've ever had in my life. The Kaiser here in Santa Clara has many doctors that were trained at Stanford, UCSF, and Harvard. I'm amazed at the quality of our doctors here, and was impressed with the treatment and process I experienced when I was diagnosed with prostate cancer two years ago.

From my POV, we have one of the best cadillac health plans in the country at very reasonable cost to the consumer.

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