Monday, October 24, 2005

Crony Capitalism

There's a story by Knight-Ridder about how the Army purchases equipment they need. Here's a selection.
The Pentagon paid $20 apiece for plastic ice cube trays that once cost it 85 cents. It paid a supplier more than $81 apiece for coffeemakers that it bought for years for just $29 from the manufacturer.

That's because instead of getting competitive bids or buying directly from manufacturers like it used to, the Pentagon is using middlemen who set their own prices. It's the equivalent of shopping for weekly groceries at a convenience store.

And it's costing taxpayers 20 percent more than the old system, a Knight Ridder investigation found.

The higher prices are the result of a Defense Department purchasing program called prime vendor, which favors a handful of firms.
So here's a question; how do you get to be a prime vendor?

Here's another, why doesn't the military harness the power of capitalism and competition to achieve the best results?

Here's a third, who does this Prime Vendor system benefit?

Something to consider, my bad pennies.

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