My favorite example is silver paint, silver paint is used on stealth aircraft it price was $300 a gallon commercially, the military paid $3,000 a gallon for the same paint from the same supplier.
A 10x markup sounds accurate based on what I know about other costs. My friend’s dad runs a business that mostly hires veterans. That got him contract work for the government (not defense, keeping it vague on purpose) and he blew my mind when he told me the hourly rate they could get away with charging
The hourly rates include all the overhead and benefits. A 3-4x rate is common and aligns with costs in the private sector. An electronics lab employee is going to have a much higher overhead rate if they work in something like a clean room or with expensive equipment their rates can be in the 5-8x range.
Government accounting is all weird. Sometimes they’ll assign a percentage to a part. They then take then total including development cost and distribute on percentage.
So a toilet may show up as 10k but really they paid 50 dollars for it. It’s just how it’s done in accounting.
My favorite example is silver paint, silver paint is used on stealth aircraft it price was $300 a gallon commercially, the military paid $3,000 a gallon for the same paint from the same supplier.
A 10x markup sounds accurate based on what I know about other costs. My friend’s dad runs a business that mostly hires veterans. That got him contract work for the government (not defense, keeping it vague on purpose) and he blew my mind when he told me the hourly rate they could get away with charging
The hourly rates include all the overhead and benefits. A 3-4x rate is common and aligns with costs in the private sector. An electronics lab employee is going to have a much higher overhead rate if they work in something like a clean room or with expensive equipment their rates can be in the 5-8x range.
As the guy in question said, “it’s the same exact thing we do for Amazon but 6 times the price”
No clean room or special equipment as they’re buying labor, not electronics
Government accounting is all weird. Sometimes they’ll assign a percentage to a part. They then take then total including development cost and distribute on percentage. So a toilet may show up as 10k but really they paid 50 dollars for it. It’s just how it’s done in accounting.