. . production cost estimating, I know the game pretty well.

My biggest problem was the law that said I couldn't sell to the government at a higher price than I sold to non-government entities, so it was necessary to differentiate the product wherever possible. If we couldn't demonstrate it was a different product, we had to figure out how much we could pad the non-government orders without losing the business. Fortunately, our competitors had the same problem, so it was sort of a game of chicken.

There was also this law that said that the maximum profit you could make on a government contract was 12%, and you had to give a bit to make the purchasing auditor look good, so the real allowed margin was less than 11%. A 10.8% profit just doesn't hack it when you are in a business with a 30% risk, so money has to be buried (and I are an expert at that).

To be awarded the contract, even though I was the low bidder, I had to show the auditor the profit was less than 12%, and at conclusion of every contract, a follow-up audit team would come in to verify we really did make less than 12%, all said and done.

Now, Lockheed, Boeing and McDD had real auditors, and you had to be very careful. Yes, they knew you had to hide money to stay in business, but you'd better be good at it because they were going to take it if they could. Government auditors, were all retired military who got the job on serivce points. If you could keep them awake, you could pull off stuff that would cause an Arthur Andersen partner to blanch white.

So, yes, the government really does get screwed, but not to anything like the extent people presume. When you see a hammer sell for $500, chances are, after meeting the spec and complying with the law and completing the paperwork that critter cost the manufacturer a good $420, perhaps more. On an order for two compliant toilet seats, the manufacturer's cost could easily exceed $1000 each. Just the set-up cost to make just two of anything is stunning - then add all that compliance paperwork . . .

Of course, the government has its reasons. Most of those specifications, regulations and paperwork nightmares were instituted ot prevent fraud. It's just an unfortunate side effect that they make fraud mandatory for survival.

Now, my experience is all pre-COTS (Commercial Off the Shelf), but I'me sure that's just made the game even more complex and interesting.

. . the requirements we had from the primes were at least as stringent - and their inspectors were a lot pickier. Stuff that was good, but might be questioned, was marked "Not for primes" and sold to the government.