The Economics of War Dogs

The Pentagon handed a two hundred and ninety-eight million dollar weapons contract to a twenty-one-year-old and a former massage therapist working out of a Miami Beach apartment. They did not hack anything. They won it in the open, on the government’s own website, by following the rules. So how does that happen?

In this video, we break down the complete economics of War Dogs: the real $298 million ammunition contract, the small-business loophole that made two kids into arms dealers, the illegal Chinese ammunition they repackaged through Albania to make their margin, and the $40 million movie that barely earned its money back.

Discover how eighteen-year-old Efraim Diveroli took over a dormant shell company called AEY and monitored the federal contracting site FedBizOpps day and night; how small-business set-aside rules let a company that was functionally a kid with a laptop out-bid the giants; how winning on the lowest bid forced them to source the cheapest ammunition on earth, decades-old Communist surplus that turned out to be Chinese-made and banned; how a New York Times investigation in 2008 collapsed the whole thing into a suspension, a four-year prison sentence, a $250,000 fine, and a fourteen-year debarment; and how the 2016 film, directed by Todd Phillips and adapted from Guy Lawson’s Rolling Stone article, paid the journalist and the cooperating partner David Packouz while Efraim Diveroli, the man who built it and did the time, was shut out and sued the studio.