The $500 hammer...fact or fiction?

[mjr]

So, the "$500 hammer" is usually cited as an example of "wasteful government spending". Basically, it's "cited" that we're spending $500 for a hammer, when a $10 one will do the job.

A claw hammer can be purchased at Home Depot for $10 or so.

There are other examples, but this is the most ubiquitous.

So, the $500 hammer...fact or fiction? If it does indeed "cost" $500 for the Federal Government to buy a simple hammer, my question is "Why?"

[s_stabeler]

No. Basically, what happened was there was a military project that bought a bundle of spare parts- and when the person allocating the budget did so, they treated everything as having the same (proportional) R&D costs- and some of the components bought in the same bundle were highly technical.

basically, an utter moron requested $425 for R&D on a hammer in addition to the $10 cost of the hammer.

to use another example of something similar, Tomahawk Missiles are often cited as costing $2 million per missile- but buying a new Tomahawk Missile actually only costs $750,000. ( same for the B-2- the marginal cost is actually 700 million, not $2 billion- the difference is primarily because it cost a LOT to develop, and only 21 were ever made)

In short, it's not the case.

[wolfie]

So you're saying something equivalent to "They needed a milling machine and a dozen hammers - that's 13 tools, so they allocated the bill equally among all the tools. End result - $500 milling machine, and a dozen $500 hammers"?

Sounds about right to me - the people looking for "waste" completely overlook the bargain of a $500 milling machine because it doesn't fit their agenda.

Also, with the way the procurement process goes, even if they paid the vendor $10 for a hammer, it would take at least $20 in internal manpower to process the paperwork, so it would wind up costing the agency in question $30.

[s_stabeler]

not...exactly. It's more a case of buying hammer among a group of spare parts. the average R&D cost to develop the spare parts is $420 for that batch, so they accounted for it as a hammer that cost $420 to develop. (to illustrate the point better: if it had been a B-2 bomber and a hammer, the hammer would have been entered onto the books as a $1billion hammer)

You're right, though, that it's not truly waste.

[KabeRinnaul]

I also recall hearing somewhere or other that the military sometimes needs specialized versions of tools that add to a higher actual cost (as opposed to strange budgeting quirks), like a hammer with a beryllium head so that it doesn't spark when it strikes, which can apparently be a concern aboard ships or around ordnance.

[Greenday]

As an expert on government purchases, no, no one spends $500 on a hammer. If I need a hammer, I purchase one from Lowes or Home Depot. I get questioned if I pick something that has an obvious cheaper alternative. There's spending limits on purchases and the more expensive it gets, the more important the person that has to approve it.

[Daskinor]

Federal contracts can get weird. A high price cheep item;

Might be part of a average cost of lot purchase
Might be a very particular toilet seat, like a replacement for a toilet on a B-52.
Might have the labor cost to use the hammer for the job included in the hammer price.

The list goes on and on.

In the end, does not happen often. Might be a rare instance, but there is almost always somthing going on.

[wolfie]

Federal contracts can get weird. A high price cheep item;

Might be a very particular toilet seat, like a replacement for a toilet on a B-52.

Since those planes were built in the 50s/60s, I'd imagine that some of the components are out of production. If the seat to fit the B52s toilet were no longer commercially available, the cost of replacements would include tooling for a short production run. The alternative would be to replace the toilets with ones which fit seats that are currently available - which would cost more than the custom seats.

[s_stabeler]

They tend to cannibalise other planes that use the same part, actually. ( for example, the F-15 uses the same- or only cosmetically different- avionics compute. Plus, the aircraft has a lot of spare parts from B-52s that had to be scrapped under the START II treaty with Russia. (to say nothing about the 107 B-52s they still have there. Suffice it to say, considering the B-52 will be replaced in the mid 2020s with the under-development B21 (which, from what I've read, is actually ahead of schedule) is probably plenty until the B-52 will be replaced.

[Stormraven]

Not to mention that some of the items needed for repairs/maintenance are decidedly not 'off the shelf' capable.

Due to engineering tolerances on some machines (esp high end planes and such) a screw that you can buy at Home Depot is not going to do the job.

[s_stabeler]

not exactly- or rather, wile Home Depot might not, a store that was specifically for machinists probably will. The military doesn't demand tolerances any higher than industry.

[TheHuckster]

Another thing that's important to note on these kinds of figures is when it comes to research and development projects that develop into prototypes and proof of concepts, there's a huge intangible cost for the planning and labor required from managers down to researchers and engineers and then to manufacturers. For at least some of the parts there aren't any mass production efficiency. You have to build it without the same automated machinery that a full-fledged factory would have.

This means if you simply take the final bill for the prototype and simply divvy it up by the parts, you're going to find that each part has a huge price tag, even though that's really not at all reasonable. A good portion of the bill is applied to the time it takes to plan and design the thing long before the first rivet is nailed.