A 2011 article about two cocky young men who inexplicably became involved in the complex world of international arms trading is unleashed on the big screen this weekend. The film ‘War Dogs’ is a somewhat fictionalized (we hope) account of how two unqualified Miami Beach party boys found themselves in over their heads in the world of international trade and government contracting. It all began with a Rolling Stone article and subsequent book, Arms and the Dudes.
The premise of the movie is that two young men stepped out of a college fraternity party and into international trade. That’s not quite the case. While they didn’t even have college degrees under their belts, they did have some connections in the business, so to speak. Efraim Diveroli, sold weapons to local police. He’d gained experience in the arms trade by working for his father and uncle, and started his own business under a company first incorporated by his father. He intelligently decided that if he was going to sell arms, he was going to go for the big guns – literally – and try to procure contracts with Uncle Sam.
How Can a College Dropout Win a Multi-Million Dollar Defense Contract
You probably know this already, but the federal government is legally required to open every purchase to public bidding (with rare exception). Any one, at any time, can see what Uncle Sam is buying with a simple visit to FedBizOpps. And while the solicitations can be confusing, and run dozens of pages long, anyone with a business and an account can bid. And even the War Dogs didn’t start with million dollar contracts – they started with smaller programs from propane to helmets, before hawking major arms.
Two advantages specific to today’s contracting market also helped them – small business preference and the need for a bargain. If the war dogs could claim to deliver and provide the cheapest product, they were more likely to win to bid. In the deal immortalized on the big screen, the War Dogs underbid their nearest competitor by $50 million. They still stood to make millions themselves. They had the advantage of being a small business, yes, but at the end of the day the government procurement officers simply couldn’t overlook that big of a cost savings. Assuming they could deliver.
The movie looks to make it appear the government contracting industry is so corrupt anyone could play the system like this. That’s not exactly the case. Competition is good for the industry, to be sure. And few individuals have the smarts, savvy, connections and capital to play off the kind of high-stakes trading that makes its way onto the big screen. The biggest issue most of us will recognize is that a lowest-price-technically acceptable model of government procurement doesn’t come without costs. And as funny as they may be, the repercussions (and dollars spent to enforce accountability) cost far more than the money saved.
