Global Fastener News

1983 FIN – Wall Street Journal Points Out Prices Pentagon Paid for Bolts

November 29
00:00 2012


October 6, 1983 FIN – Fasteners were a topic in a front page Wall Street Journal article headlined “How Pratt & Whitney Gains From the Way U.S. Buys Spare Parts.”
The October 3, 1983 article descries the Pentagon’s purchasing practices for spare parts from Pratt & Whitney instead of buying those parts direct – resulting in the Pentagon paying a big markup on low cost items like fasteners.
The lead paragraph reads: “For two decades, Pratt & Whitney Aircraft has done a lucrative business in spare parts with its biggest customer, the Pentagon. But a furor over nuts and bolts is threatening to sour its sweet deal!”
The “furor over nuts and bolts” has to do with the $17.89 price that the Pentagon is paying Pratt & Whitney for 67 cent bolts.
Pratt & Whitney went to its lowest bidder, SPS Technologies, which produced the bolt for $11.45 each (figuring in the cost of setting up special machine tools) and then Pratt & Whitney added another $6.14 per bolt – about 53% hike – to cover its overhead and profit, bringing the price to the Air Force to $17.59 per bolt.
Editor’s Note: FIN isn’t questioning the price tag that SPS put on the bolt or even the markup charged by Pratt & Whitney, because we obviously don’t know how justified those costs were. The thing we would like to point out is the fact that if you are selling to the government (including municipalities and state agencies), you better make sure that what you sell them can stand the kind of scrutiny that these sales will undergo in the future compared with the somewhat relaxed procedures in the past. ©1983/2012 Fastener Industry News
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