Boeing overcharged the U.S. Air Force 8,000% above market for soap dispensers

Can you imagine even being a one-man shop making 222 bespoke soap dispensers to some absurd spec AND jumping through all the documentation hoops that are required for only $150k? I wouldn't take that job. Sounds awful.

You also need to provide exact replacement parts for 50 years so you should probably make 666 of them just to be safe.

Yeah. People who haven't done manufacturing may laugh, but depending on how many custom parts there are you could easily spend most or all of that $150K just on the molds/tooling.

Now, like you said... the root cause here is probably some absurd spec that prevents them from using some existing commercial soap dispenser whose costs have already been amortized.

Then again, maybe the spec isn't absurd. The C-17 may need to fly in contested airspace. Maybe damage control is a concern. Maybe they can't use commercial soap dispensers because they're plastic and they don't want the plane to fill up with toxic fumes from burning plastic. That is a random guess. I have no idea.

I couldn't find pictures of the soap dispenser, but here's apparently a urinal from some version of the Globemaster. I get the feeling these parts are kinda custom... https://www.flickr.com/photos/morganone/122375474/in/photost...

I think that isolating their relationship to a single transaction like this is disingenuous. Our government pays this company many billions per year. They likely or should have had extra of these laying around for replacements. It’s not unreasonable to expect them to charge a reasonable amount for everything.

But for some reason Boeing continually gets away with being Boeing for some reason.

the article believes they should cost $10 though

They probably would if they were made in china, and sold in Walmart by the millions.

Sounds interesting!

The first year you learn how hard it is, you spend 80% of your time on compliance documentation and 80% of your budget on tooling. You still don't have a satisfactory product or a mastery of filling out the forms. It drags on into the second year, you're living on ramen but eventually deliver it (if there's one thing the government procurement process is tolerant of, it's delays) and get paid.

The third year you take on a additional contract, for 200 toilet flushes or whatever. New manufacturing challenges, but at least you're getting the paperwork down.

After a few more jobs, you've cracked it. You start bidding for all the military's bathroom-related contracts. At five or six contracts a year, you have a million or two rolling in (and low manufacturing costs - remember, the spec is such that you can produce it for 80x lower) and you've hired five employees.

By year five, the only thing you care about improving is sales. You still have 5 machine shop staff, paid well but not enough to make them wealthy. You focus on hiring ex-military brass and making them sales reps and lobbyists. You're into tens of millions of revenue, that is, profit.

Year 8, you sell the thing to Northrop or to a private equity firm and go retire on an island.

I wonder what's special enough for this to be different from certified aviation grade equipment? It'd be nice it they could either make a bunch of a design (usefully) for the military to fulfill mil-spec, or if they could take an existing design and just make it in a mil-spec compliant way.

tbh the only solution to the problem is to spend the $250,000 it would probably cost in tooling etc and fill the Boeing ~1,000 order and sell another 99,000 to the public. At $10 each and without paying yourself anything you would probably just about break even.

But you also get paid for those

You probably also really don't want slippery floors at a critical (or any) time.

Also, every material that goes into them needs to be tracked (with paperwork) since it was mined/smelted.

You also can't just drill a couple of holes wherever to mount it and you don't want it turning to a missile if the plane has to do any aggressive maneuvering.

If you can pull it off as a worker-owned co-op (and don't ruin it in year 8, but keep on working at the scale you want), that's a really nice business.

Though you might want to also take on some non-government contracts, both to keep everyone busy in between government contract demands on their roles, and to reduce the risk of having "only one customer".

Boeing could have specced some weird stuff on the dispenser, just to make it harder to get elsewhere. Things like impact resistance, yield strength in a fire, or counter-rotating threads to prevent it shaking out.

I worked on a government software contractor that ended up growing from 10 people to 300 people in about 8 years and sold to Booz Allen Hamilton for around $50 million. You absolutely nailed it.

Sadly I didn't get much of a payday out of it.

Any thought what you should have done differently, with the information available at the time?