Politics

[PHOENIX PHIL]

You did exactly what @Tanks described.

Unlike your company most corporations doing government work are public. Their margins are reported quarterly. For instance a typical defense contractor, you know the guys with the thousand dollar hammers, run around 12%.

When I was in school at Virginia Tech, they had a great program that was known as their Co-Op program. It focused primarily on (perhaps entirely, been a long time so I've forgotten) the engineering students. Various companies would interview engineering students and hire them to work for them in an on again / off again fashion.

So at various points of the year you would be in school and in other times at work. The upside to this was you earned damn good money in comparison to the average student working in fast food for a summer and you gained experience in your field and within various disciplines within your field. The downside was it extended your graduation date.

I was hired by the Federal Systems Division of IBM in Manassas, Va where they developed and manufactured the sonar systems for the USN submarine fleet. I can remember my fellow full time colleagues saying how the contracts ran at about 10% profit margin which was half or worse of just about any other division of IBM. Now of course 10% of billion dollar or so contracts is a lot of money.

But in terms of risk, 10% profit margin in the commercial world just doesn't cut it.

 

[Brent in Az]

When it comes to government contracts, and the lack of government oversight and transparency, the name Haliburton during the rebuilding of Iraq comes to mind.


It's not factual until someone drops the receipts, but rumor has it, that Powell overspent on the new Federal Reserve building by almost 50% = $1.5B.
We'll see how that plays out.
Need the DOGE boys on the case .....lol.

 

[Brent in Az]

Australia taking in U.S beef for the first time ever.
I thought the Aussies have a big beef homegrown market of their own, and were big suppliers to Asian markets?

 

[mdwest]

Construction change orders. That's where a lot of money is made.

I'll definitely give you that one..

Its not limited to construction.. thats a known tactic in the IT/IS world when dealing with the USG as well..

Everyone knows the USG is going to change things a dozen times or more before a project ends.. Its not uncommon during the initial solicitation for bidders to go so far as to point out key mistakes in a government request for proposal (RFP) and ask questions or ask for confirmation about something stated that everyone knows is either wrong, or isnt the best way to go about doing something..
Then sure enough, six months after an award and after work has started, the government will decide they want or need something different than what they originally asked for.. and will issue a contract modification to address it..

And then the contractor has them over a barrel.. they can pretty much dictate terms on that mod, or simply refuse it.. leaving the government the choice of having to solicit a new contract to cover their desired change (which would take a LONG period of time and cost a lot of money just to get the solicitation released, much less awarded)..

So.. in the IT/IS field, as well as construction field.. its not uncommon for bidders to initially bid work with little to no margin at all built in.. they'll attempt to win it at a "break even" position or with just a tiny bit of fee associated (because in the LPTA world, again, the lowest price always wins.. not the best solution)..

And once they win the contract, they know they'll make things up on all of the change orders and contract mods that they feel certain are going to happen during the contract life cycle.. because sadly, the government is that screwed up when it comes to procurement..

Im sure it happens in other fields as well.. but construction and IT/IS are where I know it happens A LOT.. and it influences companies in their bid tactics/strategies..

My firm is a "professional services" provider.. so, change orders arent something we can really count on.. they are a very, very rare occurrence for us.. what we do see with some measure of frequency is changes to the scope of our contracts where the government decides they want more or less of something already being provided.. or they want to remove a particular service they are already buying or add a new service they havent bought yet.. they'll negotiate a contract mod with us.. but unlike the change order scenario, if we try to price gouge or present anything above a reasonable price to them, they can easily walk away and procure the same service elsewhere under a different contract vehicle, etc..

 

[Scott CWO]

Knowing Scott as I do. His kids didn’t have a choice

Hahaha! Well, my youngest daughter did test me a bit in high school but between her twin brother being 6’3”, 205 pounds, the record setting QB of the football team and an “A” student and me having a bit of a reputation after putting four kids through that high school, she didn’t have much of a chance, although it took her a while to come to that conclusion! When your job is to kill things for a living, it definitely helps! One of the funny stories our kids all still talk about occurred when I happened to pick up my daughter’s phone and look at it after she received an upsetting text from a boyfriend that I didn’t like. I won’t repeat here what it said but it’s an understatement to say that I wasn’t happy with the text, either. This crappy boyfriend was at his job when the text was sent. I quickly jumped in my truck to make the 20 minute drive to town to find him. Fortunately for him, my daughter warned him that I was coming. When I got to his place of employment, his boss said he had quit his job and left in a rush! The whole thing worked out great because she never dated him again. That text was the opening I needed!

 

[Red Leg]

Right on cue. It’s not hard to elicit a rapid and predictable reaction from the Clinton/Obama/Biden apologists here! Never fails to entertain.

Yeah, the anti-Trump establishment types certainly like to stick up for one another.

Very inciteful contribution to the discussion.

I was simply responding to a comment he made over my criticism of the new federal reserve building, and it's costs.
Trump seems to be fully aware what's going on, and the overly bloated costs attached to that project.

Like you, I have no idea whether or not the building reconstruction is at reasonable cost or not. I do know that the work is being done by two joint ventures - one formed by Quinn Evans Architects and Arcadis. Quinn Evans specializes in the design restoration of older buildings, and Arcadis would be integrator of the actual engineering. Arcadis is publicly traded and their portion of the joint venture would report through that public accounting. Arcadis had a net income margin of 4.9% in 2024 and an operating margin of 10.4%. The general contractor for the effort is a second joint venture between Balfour-Beatty and Gilbane. Balfour-Beatty is a well known publicly traded company with net and operating margins under 3%. If the cost is outrageous, which it may be, neither Arcadis nor Balfour-Beatty are not exactly realizing a windfall.

Whether the board of Governors should have approved the project or its scale is another matter. But the implication that it is a boondoggle where companies and individuals are getting rich would seem to be a stretch.

Finally, taxpayer contributions were not used for the contract. The funds came from interest the Fed earns on its securities. After expenses (the building for instance), the Fed transfers earnings to the US treasury - 90-100 billion annually.

The complaining about the building is largely political theater.

 

[Red Leg]

I'll definitely give you that one..

Its not limited to construction.. thats a known tactic in the IT/IS world when dealing with the USG as well..

Everyone knows the USG is going to change things a dozen times or more before a project ends.. Its not uncommon during the initial solicitation for bidders to go so far as to point out key mistakes in a government request for proposal (RFP) and ask questions or ask for confirmation about something stated that everyone knows is either wrong, or isnt the best way to go about doing something..
Then sure enough, six months after an award and after work has started, the government will decide they want or need something different than what they originally asked for.. and will issue a contract modification to address it..

And then the contractor has them over a barrel.. they can pretty much dictate terms on that mod, or simply refuse it.. leaving the government the choice of having to solicit a new contract to cover their desired change (which would take a LONG period of time and cost a lot of money just to get the solicitation released, much less awarded)..

So.. in the IT/IS field, as well as construction field.. its not uncommon for bidders to initially bid work with little to no margin at all built in.. they'll attempt to win it at a "break even" position or with just a tiny bit of fee associated (because in the LPTA world, again, the lowest price always wins.. not the best solution)..

And once they win the contract, they know they'll make things up on all of the change orders and contract mods that they feel certain are going to happen during the contract life cycle.. because sadly, the government is that screwed up when it comes to procurement..

Im sure it happens in other fields as well.. but construction and IT/IS are where I know it happens A LOT.. and it influences companies in their bid tactics/strategies..

My firm is a "professional services" provider.. so, change orders arent something we can really count on.. they are a very, very rare occurrence for us.. what we do see with some measure of frequency is changes to the scope of our contracts where the government decides they want more or less of something already being provided.. or they want to remove a particular service they are already buying or add a new service they havent bought yet.. they'll negotiate a contract mod with us.. but unlike the change order scenario, if we try to price gouge or present anything above a reasonable price to them, they can easily walk away and procure the same service elsewhere under a different contract vehicle, etc..

Yes and no. Development and production are the world in which I operated. Yes, we would sometimes take risk on an initial bid counting on production to achieve margin. The kicker for the Lockheed Martins, Northrops, and GDs of the world is that about only one out of three or four program awards ever make it to full rate production. Hence, LMT, NOC, and GD net margins in 2024 of 9.02%, 10.17% and 7.89% respectively.

 

[Aaron N]

I'll definitely give you that one..

Its not limited to construction.. thats a known tactic in the IT/IS world when dealing with the USG as well..

Everyone knows the USG is going to change things a dozen times or more before a project ends.. Its not uncommon during the initial solicitation for bidders to go so far as to point out key mistakes in a government request for proposal (RFP) and ask questions or ask for confirmation about something stated that everyone knows is either wrong, or isnt the best way to go about doing something..
Then sure enough, six months after an award and after work has started, the government will decide they want or need something different than what they originally asked for.. and will issue a contract modification to address it..

And then the contractor has them over a barrel.. they can pretty much dictate terms on that mod, or simply refuse it.. leaving the government the choice of having to solicit a new contract to cover their desired change (which would take a LONG period of time and cost a lot of money just to get the solicitation released, much less awarded)..

So.. in the IT/IS field, as well as construction field.. its not uncommon for bidders to initially bid work with little to no margin at all built in.. they'll attempt to win it at a "break even" position or with just a tiny bit of fee associated (because in the LPTA world, again, the lowest price always wins.. not the best solution)..

And once they win the contract, they know they'll make things up on all of the change orders and contract mods that they feel certain are going to happen during the contract life cycle.. because sadly, the government is that screwed up when it comes to procurement..

Im sure it happens in other fields as well.. but construction and IT/IS are where I know it happens A LOT.. and it influences companies in their bid tactics/strategies..

My firm is a "professional services" provider.. so, change orders arent something we can really count on.. they are a very, very rare occurrence for us.. what we do see with some measure of frequency is changes to the scope of our contracts where the government decides they want more or less of something already being provided.. or they want to remove a particular service they are already buying or add a new service they havent bought yet.. they'll negotiate a contract mod with us.. but unlike the change order scenario, if we try to price gouge or present anything above a reasonable price to them, they can easily walk away and procure the same service elsewhere under a different contract vehicle, etc..

That’s also no limited to govt. Look at how over budget every large industrial project tends to be. Or at least in my neck of the woods. Contractors bid tight to the CWP knowing full well they will make their money on change orders.

 

[Scott CWO]

What we all thought about what went on could be much more egregious than we all knew:

Putin kept claims Hillary Clinton had physical, ‘psycho-emotional’ problems under wraps because he thought she would win 2016 election: Gabbard

Russian intelligence obtained damaging information about former Secretary of State Hillary Clinton’s health amid her 2016 presidential campaign.

nypost.com

I’ve stated on this forum before that President Clinton replaced the longstanding White House doctors because they wouldn’t go along with injecting him with his daily drug cocktail. This information came from a doctor I guided who was a friend of the White House doctors and the doctor I guided also worked for G.W. Bush to cleanup the Red Cross after corruption was discovered after 9/11. So, it doesn’t surprise me much to learn that Hillary was also on drugs.

 

[WAB]

I am sure all of us would benefit from your experience in bidding and managing government contracts and programs. Please share how you did it differently and at less cost. With those savings, I am sure you were wildly successful.

Exactly! I was responsible for the supply of vast quantities of JP-4 and JP-8 over the course of my career. Bottom line, supplying government contracts is more expensive than civilian contracts. If you want to solve this problem, it has to be
Solved by the government not the supplier.

 

[jruby]

I'll definitely give you that one..

Its not limited to construction.. thats a known tactic in the IT/IS world when dealing with the USG as well..

Everyone knows the USG is going to change things a dozen times or more before a project ends.. Its not uncommon during the initial solicitation for bidders to go so far as to point out key mistakes in a government request for proposal (RFP) and ask questions or ask for confirmation about something stated that everyone knows is either wrong, or isnt the best way to go about doing something..
Then sure enough, six months after an award and after work has started, the government will decide they want or need something different than what they originally asked for.. and will issue a contract modification to address it..

And then the contractor has them over a barrel.. they can pretty much dictate terms on that mod, or simply refuse it.. leaving the government the choice of having to solicit a new contract to cover their desired change (which would take a LONG period of time and cost a lot of money just to get the solicitation released, much less awarded)..

So.. in the IT/IS field, as well as construction field.. its not uncommon for bidders to initially bid work with little to no margin at all built in.. they'll attempt to win it at a "break even" position or with just a tiny bit of fee associated (because in the LPTA world, again, the lowest price always wins.. not the best solution)..

And once they win the contract, they know they'll make things up on all of the change orders and contract mods that they feel certain are going to happen during the contract life cycle.. because sadly, the government is that screwed up when it comes to procurement..

Im sure it happens in other fields as well.. but construction and IT/IS are where I know it happens A LOT.. and it influences companies in their bid tactics/strategies..

My firm is a "professional services" provider.. so, change orders arent something we can really count on.. they are a very, very rare occurrence for us.. what we do see with some measure of frequency is changes to the scope of our contracts where the government decides they want more or less of something already being provided.. or they want to remove a particular service they are already buying or add a new service they havent bought yet.. they'll negotiate a contract mod with us.. but unlike the change order scenario, if we try to price gouge or present anything above a reasonable price to them, they can easily walk away and procure the same service elsewhere under a different contract vehicle, etc..

I have been in IT for over four decades- both as an employee and a contractor. I specialize in Unix ( go big blue)
It's called scope creep and as soon as you bring contractors it's in thier best interest to stay as long as they can. It's called scope creep and it is caused by many things but one that comes to mind is the customer not knowing what they want in the first place. The second is knowing what needs to be done but not being willing to do it right the first time. Just like building a house and making modifications as it's built.

 

[mdwest]

I have been in IT for over four decades- both as an employee and a contractor. I specialize in Unix ( go big blue)
It's called scope creep and as soon as you bring contractors it's in thier best interest to stay as long as they can. It's called scope creep and it is caused by many things but one that comes to mind is the customer not knowing what they want in the first place. The second is knowing what needs to be done but not being willing to do it right the first time. Just like building a house and making modifications as it's built.

Scope Creep in the sense that Project Managers use the word is a bit different...

PM's manage 3 primary things.. Scope, Schedule, and Budget...

Scope creep is what occurs when services or products (or whatever) are being produced outside of the projects (the contracts) stated deliverables and youre not getting compensated for it..

So basically youre providing the customer (in this case the government) something for free..

Theyve either asked you to do a little something "extra" thats not included in the contract, that they arent offering to modify the contract to cover.. or by virtue of employees not following a project plan, they end up delivering something thats not included.. or as often as not, someone in the value chain is providing something that would be seen as a "value add" to the contract... a little something "extra" that doesnt really cost the provider anything more (in terms of time or money.. i.e. schedule or budget)m but keeps the customer happy..

A little bit of scope creep isnt always a bad thing.. sometimes giving the customer a little something extra if it doesnt really cost you anything or prevent you from meeting your core deliverables is actually a good thing.. it certainly serves to make the customer happy, improve relationships, and can make everyones life a little easier.. etc..

The problem is when scope creep either starts costing you time and money that otherwise would have been spent on something else or cuts into your margins... or.. the scope creep starts hindering your ability to deliver what youve promised on time and on budget..

When the customer (again, in this case the govt) wants something very different than what it originally asked for.. whether thats a faster delivery... or a larger team.. or a different location.. or an improved capability.. or a completely new service/product that hasnt been discussed before.. thats when contract modifications and change orders come in... to keep large ticket, time consuming, and costly items or things that would otherwise inhibit the delivery of the original contracts requirements..

In those instances, an aggressive vendor/contractor has the opportunity to take advantage of its client/customer.. you essentially have them over the barrel.. their poor planning or poor understanding up front of what they actually wanted/needed.. or in some cases just a major change in conditions that were not considered or planned for.. has put them in a position where their options for problem resolution are extremely limited.. they either have to come up with an entirely new solution which is going to take a lot of time and potentially cost a lot of money... or they have to accept whatever terms and conditions the contractor gives them..

My point earlier (which after re-reading I realize wasnt really well made).. is in the IT/IS world and in the construction world as it relates to government contracting, if you look at the base contract that is initially awarded, it is very common that companies won that work by bidding very, very low margins.. some companies even make a practice of doing what we call "Buying work".. they bid the work at break even or even at a small loss.. because they think it has strategic value.. or.. they believe the government is going to change things so many times over the course of execution of the contract, that they will be able to make up all of those lost margins in the change orders..

Its a risky tactic.. because.. what if you win a $20M contract that is going to get executed over 5 years at a 1% net loss... and then no change orders ever come?

but.. to be truthful.. when dealing with the government.. the risk is pretty low in certain industries (IT and Construction in particular)... because the government has a very well established track record of issuing change order after change order after change order..

So the contractor might only make 1% on the base contract.. but plans on embedding 15% on every change order.. and knows its only a matter of time before the change orders start flowing..

When its all said and done, generally speaking the government contractor is still making margins below their counterparts that work in the public sector.. the big fees associated with the change orders just balance out the negligible fees associated with the base contract deliverables..

The motivation for doing business with the government is rarely monster profit margins in terms of percentages..

The motivation for doing business with the government is the size/volume of government contracts is typically much larger than the size of similar contracts in the private sector... the length of the government contracts is typically longer.. and.. while they are often a huge pain in the ass to deal with.. the government always pays... you have relatively no risk in terms of customers that dont pay you, money that has to be written off, etc..etc..

So while the % of profit might be lower.. the actual dollars in profits are as good or often times better (because the size of your orders are bigger)... and youre definitely getting paid once the work is complete..

 

[Tanks]

I have been in IT for over four decades- both as an employee and a contractor. I specialize in Unix ( go big blue)
It's called scope creep and as soon as you bring contractors it's in thier best interest to stay as long as they can. It's called scope creep and it is caused by many things but one that comes to mind is the customer not knowing what they want in the first place. The second is knowing what needs to be done but not being willing to do it right the first time. Just like building a house and making modifications as it's built.

Yes and no. A mentor once told me that on a fixed price project one does it according to the specifications, and on a T&M project one does whatever the customer wants/needs.

We have gotten many projects in the past where the specifications did not meet customer's need. However, we could not bid it according to what they needed as that would price us out of the bid by being way expensive. On projects like that the cumulative change orders usually cost more than the original project cost.

And no, we do not want to stay on site as long as we can. Once we finish a project, we go on to the yearly maintenance contract phase which is usually more lucrative.

 

[Brent in Az]

Thailand and Cambodia have decided to clash, which is escalating into air strikes

 

[Tanks]

Hahaha! Well, my youngest daughter did test me a bit in high school...

You were more liberal than I. In high school, my daughter could go out with friends in a group setting on weekends. However, no dating during high school as I had seen "boyfriends" taking inordinate amount of girls' time and also add additional stress. I encouraged athletics and between advanced classes and tennis team and tournaments she had no free time to date anyway.

 

[mdwest]

Thailand and Cambodia have decided to clash, which is escalating into air strikes

Thailand might be in for a rude awakening this time around..

border clashes have been going on between those two countries for as long as they have existed.. the thai and khmer hate each other.. one of the border towns in Cambodia that is a pretty big tourist town is named Siem Reap.. which literally translates to "Kill the Thai"...

Back in 2011 things got very dicey for a while between them.. it looks like this conflict is going to escalate beyond the 2011 scrap..

Over the last couple of decades Cambodia has refitted and modernized its military quite a bit... The thai used to be WAY ahead of the Cambodians in terms of quality of training, quality of equipment, etc.. the gap isnt nearly as wide as it used to be these days..

If theyre not careful, both countries are probably going to get a pretty nasty bloody nose over this one..

 

[WAB]

Yes and no. A mentor once told me that on a fixed price project one does it according to the specifications, and on a T&M project one does whatever the customer wants/needs.

We have gotten many projects in the past where the specifications did not meet customer's need. However, we could not bid it according to what they needed as that would price us out of the bid by being way expensive. On projects like that the cumulative change orders usually cost more than the original project cost.

And no, we do not want to stay on site as long as we can. Once we finish a project, we go on to the yearly maintenance contract phase which is usually more lucrative.

My experience as someone who has hired a lot of contractors, is that it is difficult to get them to stay to the finish. They see the end of the job coming and jump to the next big opportunity. We manage that with the firm with holdbacks. It’s much more difficult with the tradesmen.

 

[Brent in Az]

275,000 homeless, nationwide. I figured that number would be a lot higher, an 18% increase during the Biden years.
Good luck cleaning up the streets. I hope it works, but I've seen a lot of crazies that seem to be beyond help.
The homeless population in Tucson has exploded over recent year's, and becoming a big problem.

Homeless people can be removed from streets by cities, states in new Trump executive order

President Donald Trump will take executive action to clear the homeless from streets and send them to rehabilitation centers, according to reporting.

www.foxnews.com

 

[Brent in Az]

If true, an interesting turn of events. Maybe they bribed her with some sort of deal?
Maxwell better watch her 6.
Clintons probably have a hitman on speed dial.....lol

 

[Aaron N]

My experience as someone who has hired a lot of contractors, is that it is difficult to get them to stay to the finish. They see the end of the job coming and jump to the next big opportunity. We manage that with the firm with holdbacks. It’s much more difficult with the tradesmen.

LOA always makes us trade guys stay….