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This thread is privately moderated by otlski, who may elect to delete unwanted replies.
Mar 02, 2013, 09:19 PM
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What a rip-off, I can do that cheap

A reoccurring theme on the hobby forums is when a post is made regarding how much the government is paying for UAV flight hardware. Invariably, it is always the same. Someone says "the idiots overpaid; I can do it for half the price and still be rich".

I've thought about responding but never did. A month or so ago I saw this topic on DIY Drones and was happy to see a response by Toby Mills. Below is his response followed by my thoughts on the subject.

Comment by Toby Mills
Just to re-iterate what Bart says.
It really annoys me when we as a group look at the cost and go, I could build one cheaper than that.
The reality is... no you couldn't.
First you have to gather the requirements.
Then you have to design it.
Then you have to production-ize it. Keep in mind this includes all the tooling costs which can run into hundreds and hundreds of thousands of dollars.
Then you have to build a ground station, by the look of the ground station in the picture, its proper milspec gear built to last and endure. Hundreds of thousands of hours go into software development and testing of the software in that type of gear.
Then you have to write a user manual.
Milspec user manuals are not the one page "made in china" type stuff we normally get in our boxes. These are multi-volume manuals that take a week to read let alone write. The cost of employing a team of technical writers to do this is insane.
Then you have to get it tested and signed off by the customer. This can be a painful experience as they often come back at this point and change their requirements but make it your problem. You then have to go back to design and re-iterate again at your expense.
Then you actually have to put a team of professional trainers on the ground to train the users.
There is probably $500 to $1500 in raw component cost in each copter, but the real cost is the time of all those professionals and that’s why it costs so much.
It costs the manufacturer $20m to build the first one, then only a few thousand for the other 159 but they have to recoup all that cost.
If you were to pay someone to design and build the entire Arducopter solution with all the peripherals, ground station software and documentation and pay everyone $100 an hour (minimum). The cost would be WAY more than $20m. I can guarantee that far more than 200,000 hours have been invested in developing the Arducopter/pilot solution by all those in this community.
Just because we don't charge for our time, doesn't mean what we build is actually any cheaper.
It’s just we don't put a value on our time.

And now my thoughts...
Toby did a great job in expressing the development costs and lack of economies of scale. He spoke of many ancillary costs as well. Now, to expand on Toby’s thoughts, we also do not do all that is required by these sort of contracts. For examples…

Do you have the expertise to properly orchestrate and do the documentation required for a PDR? CDR? FMECA? Are you planning to hire personnel to do so?

What about parts sourcing? You cannot use Chinese parts - that includes electronics, software code, carbon fiber tubing, or any other parts. Looks like HobbyKing and GoodLuckBuy are out as vendors. Likely that will mean U.S. sources as much as possible, especially for critical systems. Maybe HoverFly is your answer.

BOM stability. How will your suppliers meet the long term need? Can you guarantee that you can use the exact same part on the first article that you will ten years from now? How many hobby components have that longevity? Have you done a BOM obsolescence study? What is your plan to mitigate if HoverFly is out of business in three years? Hmmm... Sounds like an organic effort might be in order. Ever do a “from-the-ground-up” flight controller design?

If the requirement were easy to achieve they would not need you to do it. Likely it involves pushing the envelope in some way. How about an example of pushing the envelope? You think these guys want to fly a GoPro for fifteen minutes? Think again. How about 1 hr loiter time over target with a multi-sensor payload? Let alone the time it takes to get out and back: yes, and back! You cannot let this get into enemy hands so it can be reverse engineered. But wait, sometimes it happens. Is your firmware protected? Self-destructing? Do you think the standard measure of burning the com-link will stop national experts?

Can you fly that mission in a GPS denied environment? How autonomous is your platform? How robust is your control link? Is your control link and high resolution sensor feed jam resistant or hijack-proof? Do you even know what the quantified definition of high resolution is?

What about the airframe? Hey, I’ve fiberglassed my car before; I can do a hand carbon fiber lay-up. Can you? The mass verses strength advantage of carbon fiber occurs when 80% of the weight comes from the carbon fiber and only 20% from the thermosetting epoxy. Do you know how to do this? How to do it every time? With no unwanted inclusions? Maybe you will use too much epoxy and be too heavy (BTW, there will be maximum mass requirements) and miss your loiter time by five minutes shy. Fail.

How did your FEA come out? X5 on ultimate strength? How about the modal analysis? What’s that? Your airframe wants to vibrate at around your blade passing frequency? Back to the drawing board.

You have to use all ROHS lead-free components. No wait! There is also a “No tin whiskers” requirement which means you have to use leaded solder. Need to reconcile this one. By the way, those cheap pc boards you can get online will not do; there are standards you have to uphold. When the boards are completely inspected then populated with components in accordance to milspecs, you will need to coat with conformal coating at $100/qt. Watch the expiration date though; you will use less than 25% of it before you have to throw it out.

Do you have a Q.A. program? Is it in compliance with ISO9000? Lots to say here.

Who is your Chairman, President, CEO, QA Manager, Chief Engineer, Production department? Wait, they are all you? No separation of responsibilities? No chain of command to work through if things go wrong? Looks like potential conflicts of interests all over the place. That will not look good for you; your potential customer will likely look elsewhere.

Several of you want to team up to make it happen? Is Crowd-sourcing via the internet acceptable? Not likely. How long have you been in business you say? Again, what is your track record to pull this off?

What will be your commodities rulings and jurisdictions? Are you going to the State Department or Commerce? Will it be EAR99 or ITAR? Better learn this especially quickly. What if you cannot export this technology limiting your potential market? You cannot civilianize the product once initially designed for specific military applications. You cannot share design details with potential foreign partners.

Your customer will definitely want a Risk Analysis – what happens if your house “factory“ burns down and you lose your production facilities? What if you are in an accident? How will you continue? How are your personal finances? Where is your off-site storage of data? Is it in a Cloud? Is your Cloud “ITAR-safe”? Is any? Some claim they are – bet it is expensive. Do you have a professional IT on staff to protect your data? You can out$ource it.

Are you having trouble finding staff to do what you can’t (remember all those studies and paperwork that you cannot fake)? Engineers with advanced capabilities are not commonly available. There is a wealth of non-U.S. persons who can do the job, and at a good price, but alas, you cannot use them because of ITAR.

How about OSHA – ever meet these guys? Make sure your facilities meet regulation$. Be sure you are ready.

Are you tired of the acronyms? Did you have to look them up on Wiki to find out what they are? You think that was a pain? Try doing the work to accomplish them. I’ve left many acronyms out in favor of plain English and, I am certain I have forgotten half of the relevant ones you would have to satisfy.

Technical performance - If you are being asked to push the envelope and you most certainly would be, the cost of researching, evaluating, testing, and successfully implementing bleeding edge technologies is very expensive. Many of the requirements for these applications involve co-integrating more than one of the bleeding edge technologies which will make your life decidedly more complicated assuming that you are even capable of leading such an operation. In many cases you will not have the luxury of evaluating existing technologies and you will have to develop it on your own.

Remember this is flight hardware. What about flight certification proving trials? Are you planning to take a year off from your real job which you are using to finance the whole project?

Speaking of finance how is your business liability insurance? Your other insurances? Can you post Performance bonds? Are your end-users in California, Texas, or a host of other states? Be prepared to file income taxes there too as well as your own state and federal. Your employees will want healthcare or else they will leave for greener pastures. You need staff accountants and have annual audits conducted by outside firms. Don’t forget about pay role taxes, etc. Did you know your export attorneys; labor attorneys; patent attorneys will run $500/hr?

Don’t forget about competition. You think you just name your price and go? Not a chance. There are plenty of others with proven track records in meeting these needs and ancillary requirements. They will be ready to go against you. Once you are perhaps one of three competing bidders you will need to demonstrate that your prices are fair on a line-item basis.

Assume for a moment that life and limb hinge upon the ultimate reliable success of your UAV system. Are you really qualified to do that? Are you willing to have that burden on your shoulders? Still think it is $500 to produce? Sure, if it were not for all the costs of doing business and the requirements in aggregate. Either you are supplying to the government or one of their primes; either way, it is the government that cost the government that much more money.

Last edited by otlski; Mar 02, 2013 at 10:20 PM.
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Mar 02, 2013, 11:24 PM
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I hate to say that I used to think: $100,000 for a drone? Mine costs much, much less and does much much more! Although I always knew in the back of my mind that its not as easy as it seems...but thanks for illustrating all these points.
Mar 03, 2013, 03:13 PM
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However it can come down to quantity over quality when it comes to the "crunch". Look at Russia vs Germany WWII.
Mar 07, 2013, 02:12 AM
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if you ever worked for a company that manufactured mil spec parts for gov contracts you would know for a fact that the price is extremely over quoted. I worked for a small company , but still the owner was making 6x the cost of manufacturing vs private bids where the standard profit margin was set and was very competitive.
*both parts were equal , both to print and spec. everything was the same and met every single requirement the mil spec parts required.
the difference was the price 600$ vs 6000$ , even at 600$ that made good profit margins for the company.

if anyone would ever look for 2 seconds into these company's that are charging 50$ for a .25 cent screw, then maybe the drones prices would be reasonable. anyone ever wonder why the spending is so out of control?
Last edited by fusionsx00; Mar 07, 2013 at 02:20 AM.
Mar 08, 2013, 07:47 PM
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Originally Posted by fusionsx00
if you ever worked for a company that manufactured mil spec parts for gov contracts you would know for a fact that the price is extremely over quoted.
I have never worked for a small company that makes simply mil-spec parts. Instead, we are a small company that makes complete systems. Not UAV systems but complex systems that make for a better analogy than does manufacturing "parts". I can't speak to your former situation or former boss, but certainly excesses are there. That said, I stand by what I wrote. Where life and death is on the line, requirements are extensively written to reflect that reality, those requirements become cost drivers. There is much more than meets the eye.

Originally Posted by fusionsx00
if anyone would ever look for 2 seconds into these company's that are charging 50$ for a .25 cent screw, then maybe the drones prices would be reasonable. anyone ever wonder why the spending is so out of control?
Reiterating, the screw example does not compare well to the discussion of the entire flight system. No doubt that there are excesses in defense spending, just as there is massive waste in the other sectors of the federal budget.

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