Entrepreneur Elon Musk explains how the Pentagon spends taxpayers $ hand over fist, (from WIRED magazine):

Musk: There’s this tendency of big aerospace companies to outsource everything. That’s been trendy in lots of industries, but aerospace has done it to a ridiculous degree. They outsource to subcontractors, and then the subcontractors outsource to sub-subcontractors, and so on. You have to go four or five layers down to find somebody actually doing something useful—actually cutting metal, shaping atoms. Every level above that tacks on profit—it’s overhead to the fifth power.

Anderson: Is that just a function of bureaucracy?

Musk: In many cases the biggest customer has been the government, and the government contracts have been what they call cost-plus: The company gets a built-in profit level no matter how wasteful its execution. There’s actually an incentive for it to make everything as expensive as it can possibly justify.

Anderson: That sort of bureaucracy must also play into the bidding process.

Musk: It’s infuriating. The Pentagon’s preferred approach is to do long-term, “sole-source” contracts—which means to lock up the entire business for one company! We’ve been trying to bid on the primary Air Force launch contract, but it’s nearly impossible, because United Launch Alliance, co-owned by Boeing and Lockheed Martin, currently has an exclusive contract with the Air Force for satellite launch. It’s totally inappropriate.

Anderson: Wow, really?

Musk: Even though we would save the taxpayers at least a billion dollars a year—and that’s a conservative estimate.