Author Topic: Air Force One Kerfuffle  (Read 18401 times)

Wayward Son

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Air Force One Kerfuffle
« on: December 09, 2016, 01:39:55 PM »
As you've probably heard, Trump tweeted about Air Force One:

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Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion. Cancel order!

On the face of it, it sounds reasonable.  Over $4 billion is a lot for a single airplane.  One would think they buy one for a lot less.

But, as usual, the devil is in the details, which Trump overlooks before opening his, eh, twitter account. :)

Per PolitiFact, there are quite a few he missed.

For one, the program is for two Air Force One aircraft, not one.  That way, while one is grounded for maintenance, the other will be on call.

Each basic aircraft only costs around $380 million dollars.  The bulk of the costs are for upgrades.  Little things that passenger aircraft don't need:

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The plane must be able to refuel while flying, and the president and his staff need to have communications capabilities equivalent to what is in the Oval Office -- secure video conferences, classified computer access, and nuclear-strike controls. It also needs robust defensive systems such as missile evasion.

The new planes will be "both the fastest and longest commercial airliner in the world," according to military.com. They will be able to fly 7,730 nautical miles -- nearly 1,000 more than the current planes -- and will produce 16 tons less of carbon dioxide on a typical flight, according to the company.

I'm sure we could get some cut-rate electronics from another country, like China, but somehow I don't think Trump would do that.

And this $3.87 billion price tag (not more than $4 billion) is over a 12 year timespan.  Because it will take time to assemble these custom aircrafts.  And because the price tag includes research, development, testing and evaluation of the aircrafts and their components, along with maintenance, fuel and the cost of pilots.

The Defense Department will spend about $8.132 trillion on other projects during that time. :)

But the best part is, Trump will not cancel the program.  Because the current Air Force One jets are 26 years old, and they have an expected life of about 30 years.  The President will need new AFOs by 2020, perhaps sooner.

So I don't see Trump feeling comfortable flying around in outdated aircraft with two-decade-old defensive technology while someone is likely to be wanting to shoot him down.  Somehow I think he values his posterior a bit more than that. :)

Unfortunately, this is only a first of a long series, where Trump shoots his mouth off before knowing or considering all the facts.  Let us hope they will stay as inconsequential as this.
« Last Edit: December 09, 2016, 01:50:19 PM by Wayward Son »

Pete at Home

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Re: Air Force One Kerfuffle
« Reply #1 on: December 09, 2016, 02:46:11 PM »
If someone knew what and when Trump was going to tweet, they could make a fortune on stock options.

D.W.

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Re: Air Force One Kerfuffle
« Reply #2 on: December 09, 2016, 02:48:49 PM »
"I know, you can just upgrade MY jet guys!  It will be a 'UGE savings!  I won't even charge you that much to fly... me around!"

cherrypoptart

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Re: Air Force One Kerfuffle
« Reply #3 on: December 09, 2016, 04:52:09 PM »
What are the profit margins on these things?

I find it hard to believe that there isn't at least a little bit of wiggle room there with four billion dollars to work with.

People write books all the time about how to negotiate for stuff like your cable/internet/phone bill, a washer and dryer, a car, or whatever. So why not haggle a little bit for an Air Force One jet or two?

What's the worst that could happen?

Will they get so insulted that they charge your more?

That might happen sometimes, for instance with a low ball offer on a house. But I doubt it will happen here so why not try to knock a few million off the price tag if possible? May as well give it a shot anyway. Most Presidents probably figure who cares? It's just tax dollars anyway. I'm glad at least one President gives it a second thought.

D.W.

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Re: Air Force One Kerfuffle
« Reply #4 on: December 09, 2016, 04:54:04 PM »
They will cave, agree to lower, then run over budget banking on you not canceling the project as starting over from scratch with someone else is gonna cost you time (you may not have) and more cash.

Wayward Son

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Re: Air Force One Kerfuffle
« Reply #5 on: December 09, 2016, 05:30:38 PM »
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What are the profit margins on these things?

I find it hard to believe that there isn't at least a little bit of wiggle room there with four billion dollars to work with.

People write books all the time about how to negotiate for stuff like your cable/internet/phone bill, a washer and dryer, a car, or whatever. So why not haggle a little bit for an Air Force One jet or two?

It's quite a bit more complex than that.

Most likely, it's a government contract where the government agrees to pay for the research for the new equipment (whatever it costs, but charges are closely monitored), then agrees to pay for installation, probably with an agreed-upon profit margin for the company.  Boeing and their subsidiaries (most of the work will be done by subsidiaries) will have to justify every penny of their charges.

Which is to say the contract has already been signed, and it isn't a "this is how much it will cost you" type.  So Trump can't ask for a discount without renegotiating the entire contract, and it is doubtful he'll get a better deal.  After all, Boeing has been negotiating government contracts a whole lot longer than Trump has. :)

Kasandra

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Re: Air Force One Kerfuffle
« Reply #6 on: December 09, 2016, 05:31:25 PM »
What will happen when he takes delivery and tells them he isn't going to pay for it because they did a crappy job.  In the past he just goes ahead and uses what he's abused, but I don't think that will fly in this case.

Wayward Son

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Re: Air Force One Kerfuffle
« Reply #7 on: December 09, 2016, 05:40:19 PM »
If he doesn't pay for the aircraft, Boeing will probably deliver them, but without the thrust reversers.  That way, he can fly them as much as he likes.  He just won't be able to stop them when they land.  ;D

You don't mess with aircraft manufacturers. ;)

Seriati

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Re: Air Force One Kerfuffle
« Reply #8 on: December 09, 2016, 05:55:14 PM »
I feel like we don't have enough information to make an informed choice here.  Yes, airplanes are expensive and yes these ones have massive expensive upgrades.  On the other hand, air plane manufacturers, military contractors and government bureaucrats have a horrible record on the side of excessive amounts of costs.  Also, the first articles on this said that he tweeted in response to reports that there would be cost overruns (over the $4b) and now you're citing back to a sub-$4b cost.

What do you think would be "clearly" too much to spend here?  Would you have the same response if this were Bernie complaining about the excess cost of the new planes?

Wayward Son

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Re: Air Force One Kerfuffle
« Reply #9 on: December 09, 2016, 06:21:22 PM »
You misunderstood the articles, Seriati (or you relied on articles by "reporters" who didn't know what they were talking about).  There won't be cost overruns of $4 billion.  The whole package is less than $4 billion.  For 2 aircraft.

Yes, there will be cost overruns.  While Boeing could agree to a contract that gives a specific price for the aircraft, for an R&D contract like this, they charge by the hour.  The costs are tightly monitored, but inevitably they go over estimates.  But they have to justify every cent they go over.

After overruns, it might go over $4 billion.  Trump might be right in that.  But that is for 2 aircraft, and that includes R&D, fuel, maintenance and pilots.  Fuel costs alone in the future could make the difference. :)

And if Bernie was complaining like this--yeah, I'd be making fun of him, too.  But a seasoned politician like Bernie wouldn't shoot off a tweet half-cocked without knowing all the facts.  He would tell you just how much the overruns were, not how the much entire program cost.  ::)

msquared

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Re: Air Force One Kerfuffle
« Reply #10 on: December 11, 2016, 06:21:47 PM »
Who else would the Govt. buy them from?  Airbus?  Not going to happen. From what I read the planes will not be ready for 4-8 years, so Trump will most likely not get to use them.

These would be, I think, basically shells of planes. They are not going to have a normal interior, so why install the standard stuff.  They get a couple of decks and then start customizing. And I think that is where the real cost comes from. When you only make 1 or 2 of an item, there is no way to mass produce. Also, what is the life expentancy of these planes?  Another 20-30 years? Seems like not all that much money, in the whole scheme of things.

msquared

Pete at Home

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Re: Air Force One Kerfuffle
« Reply #11 on: December 11, 2016, 07:06:17 PM »
Trump is either negotiating for a better price (good) or diddling the stock market, (very bad)

TheDeamon

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Re: Air Force One Kerfuffle
« Reply #12 on: December 12, 2016, 01:01:07 AM »
These would be, I think, basically shells of planes. They are not going to have a normal interior, so why install the standard stuff.  They get a couple of decks and then start customizing. And I think that is where the real cost comes from. When you only make 1 or 2 of an item, there is no way to mass produce. Also, what is the life expentancy of these planes?  Another 20-30 years? Seems like not all that much money, in the whole scheme of things.

In reverse order:

The design life for the current Air Force One was 30 years, and it entered service ~1993. The new one is scheduled for the end of 2024, meaning they're intended to run the current one anothe 2 years past its intended design life.

As to what they're getting: Not much, basically the outward appearance of a 747-8, except its not.

Aif Force One is reported to be armored, which means even the outer shell is being replaced. Given that the outer shell is armored, that changes the weight loading for the aircraft, which means the airframe will be modified to support the increased weight. This also means the engines will be replaced with more powerful models in order to ensure sufficient lift capability. The other changes just snowball things from there.

D.W.

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Re: Air Force One Kerfuffle
« Reply #13 on: December 12, 2016, 09:52:34 AM »
I also expect countermeasures cost a bit more than a spring loaded hatch, a handful of glitter and some road flares.  :)

Oh and a coms suite second to none.

Seriati

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Re: Air Force One Kerfuffle
« Reply #14 on: December 12, 2016, 10:15:18 AM »
You misunderstood the articles, Seriati (or you relied on articles by "reporters" who didn't know what they were talking about).  There won't be cost overruns of $4 billion.  The whole package is less than $4 billion.  For 2 aircraft.

Yes, there will be cost overruns.  While Boeing could agree to a contract that gives a specific price for the aircraft, for an R&D contract like this, they charge by the hour.  The costs are tightly monitored, but inevitably they go over estimates.  But they have to justify every cent they go over.

After overruns, it might go over $4 billion.  Trump might be right in that.  But that is for 2 aircraft, and that includes R&D, fuel, maintenance and pilots.  Fuel costs alone in the future could make the difference. :)

Did you misread me?  Because you just walked all the way back to exactly what I said, that with cost overruns the planes could be over $4b. 

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And if Bernie was complaining like this--yeah, I'd be making fun of him, too.  But a seasoned politician like Bernie wouldn't shoot off a tweet half-cocked without knowing all the facts.  He would tell you just how much the overruns were, not how the much entire program cost.  ::)

Given that virtually every word out of Trump's mouth receives this treatment, I'm not persuaded by this.  Again, do you think $4 billion is reasonable?  Do you really believe that cost overruns should be so routine that people are arguing they are unavoidable.  For context, they are not routine in private industry, why are they endemic at all levels of American government?

Wayward Son

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Re: Air Force One Kerfuffle
« Reply #15 on: December 12, 2016, 01:23:15 PM »
You misunderstood the articles, Seriati (or you relied on articles by "reporters" who didn't know what they were talking about).  There won't be cost overruns of $4 billion.  The whole package is less than $4 billion.  For 2 aircraft.

Yes, there will be cost overruns.  While Boeing could agree to a contract that gives a specific price for the aircraft, for an R&D contract like this, they charge by the hour.  The costs are tightly monitored, but inevitably they go over estimates.  But they have to justify every cent they go over.

After overruns, it might go over $4 billion.  Trump might be right in that.  But that is for 2 aircraft, and that includes R&D, fuel, maintenance and pilots.  Fuel costs alone in the future could make the difference. :)

Did you misread me?  Because you just walked all the way back to exactly what I said, that with cost overruns the planes could be over $4b.
 

Please explain that to your President-elect, then, since he doesn't seem to understand.  :P

The thing is that just saying there are cost overruns and it will cost over $4 billion dollars tells you nothing.  What percentage is that cost overrun.  Per the article, it's about $130 million over 25 years for two specialized aircraft and includes fuel, maintenance and pilots.  A bit over 3 percent or so.

So are you also outraged that "costs are out of control, over 3 percent over 25 years.  Cancel!"  ::)

Quote
Quote
And if Bernie was complaining like this--yeah, I'd be making fun of him, too.  But a seasoned politician like Bernie wouldn't shoot off a tweet half-cocked without knowing all the facts.  He would tell you just how much the overruns were, not how the much entire program cost.  ::)

Given that virtually every word out of Trump's mouth receives this treatment, I'm not persuaded by this.  Again, do you think $4 billion is reasonable?  Do you really believe that cost overruns should be so routine that people are arguing they are unavoidable.  For context, they are not routine in private industry, why are they endemic at all levels of American government?

What makes you think cost overruns are not endemic in private industry? :)

My managers are always making cost estimates to their management, then coming back and making "cost overruns."  Mainly because their original estimates were constrained by what their management told them they had to do, the job took longer than they expected, material costs went up, etc., etc.

Businesses make money by upping the price at the beginning.  They make sure potential cost overruns are already factored into the price.  If they don't have the overruns, great, more profit.  :D  If they do, oh well, they still have a profit.  Or they make their money from selling spare parts.  Or whatever.

So you don't see the cost overruns because they are already in the price of the product, or they are factored into other parts of the process.  You pay for them, one way or another.

But government doesn't like to spend more than they have to.  So in many programs, rather than pay more upfront, they tell the manufacturer that they will only pay the manufacturer for what they do and what they buy.  And if the original estimate is off, they will page up to a certain percentage.  It's the way that's evolved to keep costs down but make sure companies make a reasonable profit.

Now some programs do buy items at a fixed price.  But, once again, the overruns are paid up front.

So the government can buy the two aircraft for $3.87 billion plus cost overruns, or just pay $5 billion up-front.  Which would you prefer they do? ;)

D.W.

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Re: Air Force One Kerfuffle
« Reply #16 on: December 12, 2016, 01:28:56 PM »
In my experience, the only time what Wayward describes does NOT happen is when you are running a project at break even or at a loss because doing so will solidify a client relationship that will pay off (significantly) in the future through other projects. 

The only thing that's changed here is the scale of the project and the size of the price tag.  Oh, and that we have a president elect who's use to gaming the legal system to bully or cheat his way into a more favorable economic position.  Though, that, also is par for the course.  We just normally don't see it done so blatantly or... well by a president of the united states.

NobleHunter

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Re: Air Force One Kerfuffle
« Reply #17 on: December 12, 2016, 01:53:05 PM »
You know, I'd like to believe that contract that's sole-source, high-profile, billion-dollar-plus, and with a major player in the defense industry would be better run and organized than the ones I see.

But I wouldn't hold my breath.

D.W.

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Re: Air Force One Kerfuffle
« Reply #18 on: December 12, 2016, 01:59:49 PM »
What gets really scary/depressing is when you realize that a company which proposes an accurate timeline at a fixed profit margin will rarely if ever win a competitive bid. 

It takes years/decades for some purchasers to come to the determination they would rather go with the bigger seeming price tag than deal with the headaches and overages that come with taking the lowest bid.  Building a positive reputation is very hard to do when your competition is happy to undercut your price with a lie and then on the off chance they can't milk the client for more fee later, they will cut corners to make up the profits they were after in the first place.

And the more people involved, the easier it is to pull this off.  This is why mom and pop local business isn't going to stand for getting marked up as much as a government agency.  On the bright side mom and pop aren't going to change the criteria of the project on a weekly basis.  ;)

NobleHunter

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Re: Air Force One Kerfuffle
« Reply #19 on: December 12, 2016, 02:09:00 PM »
What gets really scary/depressing is when you realize that a company which proposes an accurate timeline at a fixed profit margin will rarely if ever win a competitive bid. 

It takes years/decades for some purchasers to come to the determination they would rather go with the bigger seeming price tag than deal with the headaches and overages that come with taking the lowest bid.  Building a positive reputation is very hard to do when your competition is happy to undercut your price with a lie and then on the off chance they can't milk the client for more fee later, they will cut corners to make up the profits they were after in the first place.

And the more people involved, the easier it is to pull this off.  This is why mom and pop local business isn't going to stand for getting marked up as much as a government agency.  On the bright side mom and pop aren't going to change the criteria of the project on a weekly basis.  ;)
I'm pretty sure we've lost bids because we were up against people who had no idea what the work actually involved and could ethically underbid. We'd be outright lying if we used the same cheery assumptions about how much everything would cost.

scifibum

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Re: Air Force One Kerfuffle
« Reply #20 on: December 12, 2016, 02:23:06 PM »
Trump is either negotiating for a better price (good) or diddling the stock market, (very bad)

He's actually punishing Boeing for a story that was published - minutes before he started complaining about the high costs - where one of the execs was critical of him.  He has a long and pretty consistent track record of lashing out whenever his fragile ego is threatened by someone with sufficient fame or wealth for Trump to consider them relevant. 

I consider this very, very bad.  Because this guy needs some diplomatic restraint and this is another indication that he might not be able to muster any.

D.W.

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Re: Air Force One Kerfuffle
« Reply #21 on: December 12, 2016, 03:32:41 PM »
Trump is either negotiating for a better price (good) or diddling the stock market, (very bad)

He's actually punishing Boeing for a story that was published - minutes before he started complaining about the high costs - where one of the execs was critical of him.  He has a long and pretty consistent track record of lashing out whenever his fragile ego is threatened by someone with sufficient fame or wealth for Trump to consider them relevant. 

I consider this very, very bad.  Because this guy needs some diplomatic restraint and this is another indication that he might not be able to muster any.
While, as someone opposed to Trump, I found this narrative appealing; the timing was a little tight.  He does seem to be on the ball consuming media and commenting quickly, but this was a pretty fast turn around as a revenge tweet.

rightleft22

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Re: Air Force One Kerfuffle
« Reply #22 on: December 12, 2016, 03:48:55 PM »
I think we should expect Trump to attack all government contracts.

Quote
"The F-35 program and cost is out of control,"
"Billions of dollars can and will be saved on military (and other) purchases after January 20th." Trump said on Twitter

Donald Trump on Monday widened his attack on defense contractors, slamming Lockheed Martin's F-35 fighter jet program as too expensive as aides to the president-elect said he intends to keep pushing to cut the costs of military hardware.

Lockheed shares (LMT.N) dropped 3.4 percent and other defense contractors also tumbled.

The tweet more powerful than the sword.

How will it end?

rightleft22

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Re: Air Force One Kerfuffle
« Reply #23 on: December 12, 2016, 03:51:29 PM »
I think we should expect Trump to attack all government contracts.

Quote
"The F-35 program and cost is out of control,"
"Billions of dollars can and will be saved on military (and other) purchases after January 20th." Trump said on Twitter

Donald Trump on Monday widened his attack on defense contractors, slamming Lockheed Martin's F-35 fighter jet program as too expensive as aides to the president-elect said he intends to keep pushing to cut the costs of military hardware.

Lockheed shares (LMT.N) dropped 3.4 percent and other defense contractors also tumbled.

The tweet more powerful than the sword.

How will it end?

All for challenging the status-quo but am not certain Trump can manage the uncertainty being created. Bad things happen in the vacuum of uncertainty. 

LetterRip

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Re: Air Force One Kerfuffle
« Reply #24 on: December 12, 2016, 04:04:48 PM »
Would knowing what Trump plans to tweet, and then shorting stocks based on his planned pronouncements be insider trading?

I'm curious if that might be what is happening, there was actually some sort of spy thriller book where the chairman of the Fed made a series of pronouncements that were used to similar effect.

Wayward Son

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Re: Air Force One Kerfuffle
« Reply #25 on: December 12, 2016, 04:16:37 PM »
I'm pretty sure it would be considered insider trading, LetterRip.  That would be using information that you know would affect a stock price before it was released to the public.

TheDeamon

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Re: Air Force One Kerfuffle
« Reply #26 on: December 12, 2016, 04:28:37 PM »
Trump is either negotiating for a better price (good) or diddling the stock market, (very bad)

He's actually punishing Boeing for a story that was published - minutes before he started complaining about the high costs - where one of the execs was critical of him.  He has a long and pretty consistent track record of lashing out whenever his fragile ego is threatened by someone with sufficient fame or wealth for Trump to consider them relevant.

I find the fast response making that claim a little questionable. I would be more inclined to go with an earlier theory from Limbaugh--that it was retaliation for Boeing's involvement in the Iran deal and for "their hopping into bed" with the Clinton's during the campaign. The article coming out just before the tweet did is either coincidental, or simply the excuse he was waiting to use. (Straw that broke the proverbial back, etc)

Still not very reassuring all the same, but it's a little bit better than the initial option.

rightleft22

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Re: Air Force One Kerfuffle
« Reply #27 on: December 12, 2016, 04:36:27 PM »
Trump is playing a game no one else knows the rules to yet. 

What America liked to believe about itself…
“We learned about honesty and integrity - that the truth matters... that you don't take shortcuts or play by your own set of rules... and success doesn't count unless you earn it fair and square” Michelle Obama

What America is really about
We learned about hyperbole and deceit – that the truth does not matter – that taking shortcuts and playing by your own set of rules is ok … and success is how you spin it.

Wayward Son

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Re: Air Force One Kerfuffle
« Reply #28 on: December 12, 2016, 04:39:17 PM »
It's the same rules as in Fizzbin. ;)

yossarian22c

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Re: Air Force One Kerfuffle
« Reply #29 on: December 12, 2016, 04:46:15 PM »
I'm pretty sure political intelligence is not considered insider trading.  It is one of the reasons congress people were exempted from insider trading laws.  Also I know that wall street firms have "intelligence" operatives in DC and I don't think it is technically illegal but they may just be information that comes from open records like sub-committee meetings.

NobleHunter

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Re: Air Force One Kerfuffle
« Reply #30 on: December 12, 2016, 04:47:32 PM »
I think there are three major drivers for the cost of military hardware:

Scope - where a business is happy to get the product and the manual with a phone number to order parts from. Militaries usually want the product plus a metric ton of data for logistics, support, auditing, and traceability. They're paying more to get more, in other words.

Type - specifically prototype. Designing something that does something which isn't been done is inherently more difficult that picking a product off the shelf. Worse, it's hard to estimate and budget for. They need more management and oversight so the engineers don't spend six months wandering into a blind corner or at least prioritize potential features properly.

Communication - most militaries are big enough that the people asking for things aren't the ones responsible for paying for it who aren't the ones who need it and who aren't the ones making sure everyone stuck to the contract. This makes a ridiculous amount of churn because the product wasn't what people needed because the wrong thing was asked for which is more than they're willing to pay for and then the contract was never changed accordingly. Cue up six months of meetings while you sort all that out and another three months while all the pricing is updated and another three months of waiting for the new pricing to be agreed to and another three months for a PO. Then work six months of overtime because the project started behind schedule.

Then repeat the whole thing for the Prime's subcontractors.

ETA: I don't think Trump will have much luck mitigating these factors. While the construction industry has a lot of similar problems, he seems to have failed out of the actual building part of the business and move into brand management.
« Last Edit: December 12, 2016, 04:50:37 PM by NobleHunter »

TheDeamon

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Re: Air Force One Kerfuffle
« Reply #31 on: December 12, 2016, 05:14:26 PM »
What America liked to believe about itself…
“We learned about honesty and integrity - that the truth matters... that you don't take shortcuts or play by your own set of rules... and success doesn't count unless you earn it fair and square” Michelle Obama

I guess that explains my issue with the Obama's, they still don't "get"(grok?) America.

In "Old School" America, "Rules are made to be broken."

Men become men when they realize "they can write their own rules" when it comes to their life.

Although Honor, Integrity, and being (reasonably) Fair are laudable goals. And the operative part there is probably the "reasonably" part in regards to fairness.

Life is not, and never has been truly fair. Ask the dinosaurs about that.

Trump raises issues in his own right, but in other respects. He also embodies some of the more, well,  colorful, aspects of what makes America, America.

Edit: Although this may also embody a lot of the rural vs urban America divide. In rural America, we have the space, and the resulting ability to allow the culture, where people can, and do, largely operate by their own rules. So long as they stay within certain boundaries(keeping the rest of us out of it). ;)
« Last Edit: December 12, 2016, 05:21:57 PM by TheDeamon »

TheDeamon

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Re: Air Force One Kerfuffle
« Reply #32 on: December 12, 2016, 05:19:25 PM »
Type - specifically prototype. Designing something that does something which isn't been done is inherently more difficult that picking a product off the shelf. Worse, it's hard to estimate and budget for. They need more management and oversight so the engineers don't spend six months wandering into a blind corner or at least prioritize potential features properly.

The other side of this is mil-spec. As much crap is talked about it many regards, when it comes to a wide range of items. There still are certain product ranges where they DO continue to hold very high and very exacting standards for what they're wanting. Which means that the "off the shelf" commercial option isn't "good enough" it needs to be verified as being compliant against this long list of requirements. For which a manufacturer may only bother to certify a small number of production lines for, due to the costs of keeping them certified.

D.W.

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Re: Air Force One Kerfuffle
« Reply #33 on: December 12, 2016, 05:26:34 PM »
And exclusivity / secrecy as far as that goes.

I don't think your point about the Obama's is correct.  "Grocking" the way America IS, does nothing to change the way they talk.  (This is by no means a family trait.  Many politicians appeal to our better nature.*)

*Or, depending on your level of cynicism, our self delusions.

This political season was a lesson in propaganda.  It showed us what happens when people believe without questioning.  It shows how powerful denial is when we'd rather not be introspective.  It showed us how outside forces can give us a nudge.  Something we've known forever and even used on others.  It shows us that how we like to perceive ourselves sometimes doesn't matter when faced with reality.  It's shown us that we are all hypocrites from time to time.

Wayward Son

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Re: Air Force One Kerfuffle
« Reply #34 on: December 12, 2016, 05:43:21 PM »
Quote
Life is not, and never has been truly fair. Ask the dinosaurs about that.

What people forget is that that goes both ways.

Typically those in power like to think that life isn't fair, until someone bashes their heads and takes everything that they got. ;)

LetterRip

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Re: Air Force One Kerfuffle
« Reply #35 on: December 12, 2016, 06:09:44 PM »
I'm pretty sure it would be considered insider trading, LetterRip.  That would be using information that you know would affect a stock price before it was released to the public.

Pretty sure it wouldn't be - there is only certain information gained through certain means from certain people that qualifies as insider trading.  For instance there are hedge funds that analyse filings by companies, figure out something funny with the numbers (proof of fraudulent information, etc.), short the stock, and then publish their findings.

TheDrake

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Re: Air Force One Kerfuffle
« Reply #36 on: December 13, 2016, 10:41:59 AM »
Communications can be vastly simplified under trump. They only need to encrypt about 1400 bytes per hour.

Wayward Son

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Re: Air Force One Kerfuffle
« Reply #37 on: December 13, 2016, 03:48:30 PM »
I'm pretty sure it would be considered insider trading, LetterRip.  That would be using information that you know would affect a stock price before it was released to the public.

Pretty sure it wouldn't be - there is only certain information gained through certain means from certain people that qualifies as insider trading.  For instance there are hedge funds that analyse filings by companies, figure out something funny with the numbers (proof of fraudulent information, etc.), short the stock, and then publish their findings.

The principle as I understand it is that, as long as the information in public, you can use it however you wish.  But if the information isn't public, and you have good reason to believe that it will influence the price of a stock, you cannot trade that stock or tell anyone who does trade that stock about the information until it becomes public.  That would be insider information used for insider trading.

So using public information to figure out something is not insider trading.  But knowing that the President will send a tweet that will send the stocks down, or even sending a tweet that will send the stocks down, and then using that knowledge to buy or sell those stocks would be considered insider trading.

TheDrake

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Re: Air Force One Kerfuffle
« Reply #38 on: December 13, 2016, 04:31:08 PM »
Quote
Rule 10b5-2 clarifies how the misappropriation theory applies to certain non-business relationships. This rule provides that a person receiving confidential information under circumstances specified in the rule would owe a duty of trust or confidence and thus could be liable under the misappropriation theory.

If you are a member of the same golf club as the CEO of Megacorp and he tells you about a super huge deal that's about to go through, and you trade on that information, you've got a problem.

https://www.sec.gov/answers/insider.htm

Seriati

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Re: Air Force One Kerfuffle
« Reply #39 on: December 13, 2016, 04:35:45 PM »
You might want to take another look at the insider trading rules, there's been some interesting developments in the last year or so, with the Newman case, and in the last few weeks with the SC making an insider trading decision.  The breakdown is not just whether or not the information is non-public, or whether you know its non-public.  There has to be someone who had the information and breached a duty not to share it involved, but take a look for yourself.  In any event pretty sure that Congress has some massive exemptions from the rules.

EDIT  By the way the SEC enforces what it wants the rules to be, really take a look at Newman and see if you can square it with that answer (of course Newman is in doubt after the SC decision, but even that may give you a different insight).

Wayward Son

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Re: Air Force One Kerfuffle
« Reply #40 on: December 13, 2016, 05:59:27 PM »
Well, this article makes it sound like insider trading would only apply if there was some quid pro quo when the information was given and that everyone knew it.

But that is still pretty broad.  If the person giving the information believed he would receive some benefit in the future, that could be seen as quid pro quo right there.  And if someone, let's say one of Trump children :), would receive some benefit, disclosing a tweet beforehand or making a tweet to influence a stock price could easily be considered insider trading if that is the standard.

TheDrake

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Re: Air Force One Kerfuffle
« Reply #41 on: December 14, 2016, 10:32:47 AM »
Probably I overestimate liability, because as a person with access to insider information I am careful to never state publicly that my company is working on a big deal or launching an unannounced new product. Except that one time an analyst got me loaded, probably.

As far as the Trump tweet scenario goes, there would be a very small window within which to trade. I don't see any evidence that his tweets are really planned out all that carefully in advance.


NobleHunter

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Re: Air Force One Kerfuffle
« Reply #42 on: December 14, 2016, 10:38:42 AM »
It would almost be reassuring if they were planned out. At least as something other than spontaneous outbursts of pique and hot air.

TheDrake

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Re: Air Force One Kerfuffle
« Reply #43 on: December 14, 2016, 12:11:22 PM »
Now, at a meta trading level, one might be able to build a neural network trained to predict trump's outbursts based on raw news inputs, tweets, and TV interviews. Then, trade upon his reactions minutes before they happen in highly leveraged derivatives. Shorting is child's play compared to weekly put options.

Wayward Son

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Re: Air Force One Kerfuffle
« Reply #44 on: July 18, 2018, 03:05:59 PM »
Remember Trump tweeting that the cost of the new Air Force Ones was too high?  (See the first post of this thread.)  Well, he's finally finished negotiations on it.

The original contract cost $2.87 billion between 2015 and 2021, but with expected extension beyond 2021 to finish the job, it was estimated to cost $3.73 billion total.  Outrageous!

So the Great Negotiator took them back to the table.  And here are the results.

The new contract only costs $3.9 billion.  That's a $1.4 to $1.5 billion dollar savings, according to Trump! Amazing!

It's this kind of results (and math ;) ) that makes us love him as we do. :)  ::)

rightleft22

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Re: Air Force One Kerfuffle
« Reply #45 on: July 18, 2018, 03:53:02 PM »
That tracks with many of his business deals.
It was Trump that gave himself the title of great deal maker. Like much of what he says his followers just take it on face value.
He is good self promoter.

TheDrake

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Re: Air Force One Kerfuffle
« Reply #46 on: July 18, 2018, 06:04:29 PM »
Perhaps he will take delivery of the plane and then refuse to pay for it. That would be his usual style.
Although, I do rather think that his successor will be wondering what to do with the golden toilet fixtures in 2022 or 2023 when it actually gets finished.

Seriati

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Re: Air Force One Kerfuffle
« Reply #47 on: July 19, 2018, 10:33:19 AM »
Nice grade school analysis.  Do you have anything definitive about the cost overruns and the final projections before negotiation started?  We already know the original estimate you cited turned out to be bunk, and the articles imply that your second estimate was of the same quality.

This is fake news either way.  The "savings" good or bad are fake.  They are an estimate based on a quote.  It's like arguing that you saved 50% on shirt at a Department store.  When someone else bought the same shirt "full price" for less than you paid through an outlet.

So yes, Trump's brag is tough to verify, but so is the reverse.  The only truth I know, is that government funded projects never come in on budget or on time.

D.W.

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Re: Air Force One Kerfuffle
« Reply #48 on: July 19, 2018, 10:54:33 AM »
The point Seriati is that the guy saw a number and criticized it.  Claimed he could do better, then, when he did not, he still claims victory and a savings.

It has nothing to do with the numbers being legitimate in the first place, or even that nobody could have done better.  It's that the man opens his mouth when he really doesn't need to for purely political reasons, digs himself a hole.  Then when standing in said hole, claims to everyone he is a success.

It's his ridiculousness and unforced errors that frustrate.  But not nearly as frustrating as those who nod and go, "He's right you know."

Seriati

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Re: Air Force One Kerfuffle
« Reply #49 on: July 19, 2018, 11:09:11 AM »
The "point" is that the sources cited specific information in a misleading manner.  We don't have any real idea if Trump saved a billion dollars or not.  Unless we were scrapping Air Force one alltogether and writing off the sunk costs and signing a new contract with someone else - that would cost a very big number, we were closing on a revision of this deal.  It could be Trump got taken to the cleaners, it could be he got a great deal and we saved because he negotiated, it could be that under Hillary it would have cost 50% more.

My point is the argument is fake news cause we don't actually know the details of what occurred.