Musk is ignorant in his claims about alleged savings

Musk has presented numbers for the alleged savings his efforts have generated that have gotten some criticism in the media. The example that has gotten the most attention, after being uncovered by The New York Times, is the claim of savings of $8 billion by cancellation of a DEI contract at Immigration and Customs Enforcement in DHS. This savings amount is almost as big as the entire budget of the agency ($8.8 billion). For 40% of the contracts on Musk’s list, it turns out that the money has already been spent or obligated.

Cancellation of a number of government contracts called “indefinite delivery” contracts are a major source of the savings he claims to have generated. He is referring to contracts that establish price lists for buying products such as computers or office supplies. These contracts, which run for five years or more, have a maximum ceiling value that the government can spend over the life of the contract. Musk has listed the maximum ceiling value as the value of the contract, and assumes that one saves the maximum value if one cancels it today. But this is the possible spending for five years, and the government often will not spend that amount even in five years, let alone right now. And if such a contract is cancelled, there are no savings -- the government will buy what it needs off another contract or on the open market, at prices that may well be less favorable than these contracts. Musk is not only a madman, he is a fool.