Why Elon Musk Can't Save $2 Trillion

One Foot in the Gravy

Why Elon Musk Can’t Save $2 Trillion

There is little doubt that Elon Musk is extraordinarily gifted. There is also little doubt that there is at least two trillion dollars that can be saved. So, it’s a slam dunk, right?

Wrong.

This will be a series of articles, with this post providing a general overview of the problem. The differences between government and private enterprise are not well known but are stark and shocking. In private enterprise, the objective is to achieve diligence; in government, the objective is to prove it. While in some private enterprise initiative on the part of an employee is punished, in other private firms it is encouraged. The norm in the private sector seems to be a mix. In government there are regulations governing almost everything, in particular spending the taxpayer’s money. The efforts to prove that one is following regulations are often comical. For example, while working for government in the early 1980s I encountered a situation in which the original of a document located on the East Coast had to be on the West Coast the following morning. The obvious solution was to send it via FEDEX for $10. Nope.

Celebrate Wasting Money

At that time the requirements for spending government dollars were quite clear: the opportunity had to be placed for competitive bidding, and the bidders had to have three days in which to respond. I laughed. I’ll just pay the money myself. Not so fast. Government employees are forbidden from using their own money to accomplish government purposes. The solution was for me to fly to the West Coast with the document, spend the night, use a rental car to get the document to its ultimate destination and fly back. The travel office was proud of its accomplishment in getting the cheapest government fare for the flights, the best government discount for the rental car and a special discount on the hotel room. All in all it was a mere $950-odd dollars. Government won the day by saving on everything, at every step of the way. Lost in the celebration was that FEDEX could have done the job for $10.

Congress

A separate problem is Congressional mandates involving procurement, particularly of very expensive items such as tanks and airplanes. When a new tank or fighter aircraft is proposed, the government office issuing the RFP (Request for Proposals) is irrelevant. If the government is going to spend a few hundred billion on something, say a new in-air refueling tanker as it did in the 1990s, the winning bid was going to be the one that spread production out among as many congressional districts as possible. I was on the team supporting the Airbus A-330. We lost to the Boeing 767, which had twice as many Congressional districts as we did.

FAR/DFAR

Yet another problem is that government lives to prove diligence, and the acquisition regulations are daunting. There are 56 parts to the Federal Acquisition Regulations. Part 1 alone is about 2,000 pages. To further complicate things, the Defense Department has its own set of acquisition regulations.

Future posts will address Contracting Officers and why they know nothing important, Contracting Officer’s Technical Representative, USGAAP and other fun topics.