Question

The Pentagon has been criticized for paying up to $600 for a hammer that could have been purchased from Lowes for $10. Are these criticisms justified? What examples have you come across where there are apparently excessive charges, and how might you deal with them?

Answer 1

The criticism is not justified as the deal entered by Pentagon was bundled into one bulk purchase of many different spare parts. This bundled cost when allocated among the individual spare parts they simply treated every item the same. So the hammer, originally purchased for $15, picked up the same amount of research & development overhead as each of the highly technical components.

The same way, Pentagon have overpaid nearly $30 million dollars Afghan National Army uniforms because it is unsuited to the country's terrain,