The myth of the $600 hammer (1998)
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The myth of the $600 hammer (1998)
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Re: The myth of the $600 hammer (1998)
#2Not surprised. So many stories about an organization doing something that’s evidently crazy turn out to be bullshit.
The truth is always more nuanced than what gets reported. People are (almost) never as incompetent/crazy/malicious as it might seem on a cursory review.
Re: The myth of the $600 hammer (1998)
#3Not surprised. So many stories about an organization doing something that’s evidently crazy turn out to be bullshit. The truth is always more nuanced than what gets reported. People are (almost) never as incompetent/crazy/malicious as it might seem on a cursory review.
The truth is always more complicated and boring than the viral meme.
Re: The myth of the $600 hammer (1998)
#4The so-called "real" explanation of the $600 hammer doesn't make the story any better.
The hammer did indeed cost $435. If the government wanted to buy another one, the contractor would have charged them an extra $435. Just because the extra $420 was "R&D expense" for something else, doesn't make the hammer any cheaper.
Even in the most charitable explanation, this makes it impossible to know the real cost of anything. If the contractor can lump all sorts of charges into the cost of the hammer (for unrelated projects), it's a way of hiding the true cost of anything.
I've worked for companies where they took money meant for one thing, and used it for something else. "Can you record your hours on this project under this different expense code?" This stops them from going over budget and having to explain to the client, but takes the money from another project of that client instead.
The $435 hammer sounds like that. They didn't have R&D budget, but they had a hammer budget. Let's spend the $100,000 hammer budget.
About 20 years ago, a friend of mine worked on a contract for the Department of Defense in IT. He told me that he was making $1500 per day, and for the first few weeks, the government didn't have a computer for him. So he sat at a desk, reading "printed manuals" waiting for a computer to arrive. For weeks. Making $1500 per day.
The truth is worse than a $600 hammer.
Re: The myth of the $600 hammer (1998)
#5The so-called "real" explanation of the $600 hammer doesn't make the story any better. The hammer did indeed cost $435. If the government wanted to buy another one, the contractor would have charged them an extra $435. Just because the extra $420 was "R&D expense" for something else, doesn't make the hammer any cheaper. Even in the most charitable explanation, this makes it impossible to know the real cost of anythin…
Yeah I don’t think this story is a silver bullet for “government doesn’t overspend!” That the author seems to imply
Re: The myth of the $600 hammer (1998)
#6The so-called "real" explanation of the $600 hammer doesn't make the story any better. The hammer did indeed cost $435. If the government wanted to buy another one, the contractor would have charged them an extra $435. Just because the extra $420 was "R&D expense" for something else, doesn't make the hammer any cheaper. Even in the most charitable explanation, this makes it impossible to know the real cost of anythin…
Wowza, he made 360K a year working for the DoD 20 years ago?
Sure hope he was smart with the money, you could use that to really jump start your life early
Re: The myth of the $600 hammer (1998)
#7There is truth to the uniqueness of certain requirements driving up expenses.
When you want a specific toilet seat component https://www.washingtonpost.com/business/capitalbusiness/the-... made to very some specific specs with a unit quantity of 1-3 with no inhouse production capability, and you need to reverse-engineer the existing one to make the new one, create a model, test it, research the initial design specs upon which it was based, etc., you're going to pay through the nose for it.
Now, if you can 3d print it but have already done all the upfront work and have a great 3d design that has been tested, then you may be able to print it cheaply, but legacy military & aerospace designs may not even exist in CAD designs.
Re: The myth of the $600 hammer (1998)
#8The so-called "real" explanation of the $600 hammer doesn't make the story any better. The hammer did indeed cost $435. If the government wanted to buy another one, the contractor would have charged them an extra $435. Just because the extra $420 was "R&D expense" for something else, doesn't make the hammer any cheaper. Even in the most charitable explanation, this makes it impossible to know the real cost of anythin…
> the contractor would have charged them an extra $435.
R&D expenses are one time costs, they're not charged multiple times. An extra hammer would have cost $15.
Re: The myth of the $600 hammer (1998)
#9The so-called "real" explanation of the $600 hammer doesn't make the story any better. The hammer did indeed cost $435. If the government wanted to buy another one, the contractor would have charged them an extra $435. Just because the extra $420 was "R&D expense" for something else, doesn't make the hammer any cheaper. Even in the most charitable explanation, this makes it impossible to know the real cost of anythin…
> If the government wanted to buy another one, the contractor would have charged them an extra $435.
This claim appears to contradict what the story says, as far as I can tell? He's the original:
> The military bought the hammer, Kelman explained, bundled into one bulk purchase of many different spare parts. But when the contractors allocated their engineering expenses among the individual spare parts on the list-a bookkeeping exercise that had no effect on the price the Pentagon paid overall-they simply treated every item the same. So the hammer, originally $15, picked up the same amount of research and development overhead-$420-as each of the highly technical components, recalled retired procurement official LeRoy Haugh. (Later news stories inflated the $435 figure to $600.)
> "The hammer got as much overhead as an engine," Kelman continued, despite the fact that the hammer cost much less than $420 to develop, and the engine cost much more-"but nobody ever said, 'What a great deal the government got on the engine!'"
So the bought an order containing a hammer, an engine, and some other stuff. There weren't itemized prices. So they divided the price evenly between everything in the box. Which is a silly way to do accounting. It's as if I bought a "woodworking kit" containing a hammer, a screwdriver and table saw for $900, and then I decided decided that meant the hammer cost $300.
Re: The myth of the $600 hammer (1998)
#10The so-called "real" explanation of the $600 hammer doesn't make the story any better. The hammer did indeed cost $435. If the government wanted to buy another one, the contractor would have charged them an extra $435. Just because the extra $420 was "R&D expense" for something else, doesn't make the hammer any cheaper. Even in the most charitable explanation, this makes it impossible to know the real cost of anythin…
> the contractor would have charged them an extra $435. R&D expenses are one time costs, they're not charged multiple times. An extra hammer would have cost $15.
"when the contractors allocated their engineering expenses among the individual spare parts on the list... they simply treated every item the same"
Sounds like an extra hammer would have cost an $15+$420=$435. Anyways, we'll never know.
I will say, the one thing I believe, is that the government had a bucket of money to spend on the project. Let's say it was $1 million. And the contractor was going to get all of it, all $1 million. Not a penny more and not a penny less.
And so you can't really trust the invoice is accurate except for the total being the budget available to spend.