Boeing Has Lost a Staggering Amount of Money on Its Starliner Catastrophe
Boeing Has Lost a Staggering Amount of Money on Its Starliner Catastrophe
In an official SEC filing, Boeing revealed that it took a staggering $523 million in charges on its ill-fated spacecraft last year.
Makes one wonder why fixed price contracts aren't more common compared to cost plus, with this being the perfect example in their favor.
For space craft, the risk of development was considered to be massive and involving a lot of cutting edge technology. To offset the risk, a cost plus was used so the US government would bear a lot of development risk in exchange for owning all the technology.
The recent contacts were developed at a time when the US government felt that the technology to put people in space was cheap enough to go from cost plus to a fixed fee.
The problem is that there's an incentive to game the system, especially when there's requirements that restrict how the government picks contract winners
If it's fixed cost, they cut every corner to be picked, then deliver something shitty and the government either lives with it or awards a second contract to fix it. Sometimes they don't even complete it - sometimes there's a bail where you put up collateral meant to be used as punishment and so someone else can be paid to finish your failed contract, but with large companies there's often so much proprietary shit/institutional knowledge that no one else could reasonably complete the contract without starting over... So they can fail a contract and still come back for more
If it's cost plus, big contractors take a loss initially to basically buy revenue streams they can milk indefinitely. Sure, they can only make so much per head, but that's money they know will be coming in so they're incentivized to push the headcount on the project to the limit and keep the party going as long as possible
That's the problem with rules, if you have clear boundaries corporations will inevitably exploit them. They are meant to fight corruption or bad/incompetent actors, but by codifying all of it they clearly divide what is illegal and what isn't, setting it all up to be gamed
Thanks for the thoughtful reply, those are definitely some good arguments. Sadly you are probably right that in the end no matter the rules companies will try to game them as much as possible.
If Boeing wanted our sympathy they wouldn’t have murdered those whistleblowers
If you have sympathy for capitalists at this point, you're a beaten dog who can't tell up from down.
This administration is brought to you by the capitalist coup that started under Reagan. Boeing is in no danger. They're too big to fail, and despite their propaganda, capitalists don't give a shit about market forces determining winners and losers, they use both of their purchased parties to ensure their duopolies will stay in power at the peasant's expense as per usual.
I hope so
They have killed a lot of people
Yes. But to be fair, the Starliner hasn’t (yet) killed anyone.
Good