Déjà Vu All Over Again? Boeing Overcharging for Spare Parts Says Pentagon

In yet another stunning example of the kind of wasteful spending that just never seems to end in Washington, the Inspector General at the Pentagon stated that the Boeing Co. had overcharged the federal government to the tune of $13.7 million for nearly 1,500 orders of parts. The reason for this slight oversight: a failure to negotiate “fair and reasonable prices.”

A summary was released a few weeks ago in which the IG discussed the findings to a certain extent and explained the process and reasoning behind it saying that:

“The objective of the audit was to determine whether Defense Logistics Agency (DLA) Aviation obtained best value and purchased sole-source spare parts at fair and reasonable prices from The Boeing Company (Boeing). We reviewed contract actions associated with SPM4A1-09-G-0004 and SPM400-02-D-9407 that were awarded to Boeing. Specifically, we reviewed costs for 60 spare parts on 2,659 delivery orders, valued at about $81.1 million, to determine if DLA Aviation received a fair and reasonable price.”

The Pentagon has made it clear they want Boeing to repay the entire sum of $13.7 million for 573 aluminum ‘bearing sleeves’, which are used on an aircraft’s main landing-gear door. The part normally costs $10 per unit but Boeing charged the Pentagon $2,286 apiece, according to the IG audit marked For Official Use Only. The IG is not alone in this process and it is worth noting that, according to Boeing spokeswoman Ellen Buhr, Boeing “has been working with the Defense Logistics Agency” and the IG.

Unfortunately, this isn’t the first time we have seen this type of “overcharge” from Boeing. Back in 2011, it was revealed that the company had done the same on helicopter parts they had sold to the army:

“Taxpayers were massively overcharged in dozens of transactions between the Army and Boeing for helicopter spare parts, according to a full, unredacted Department of Defense Office of Inspector General (DoD OIG) audit that POGO is making public for the first time. The overcharges range from 33.3 percent to 177,475 percent for mundane parts, resulting in millions of dollars in overspending”

Some of the overcharges from that report showed what amounted to an egregious offense to taxpayers:

• $1,678.61 for another tiny part, also smaller than a dime, that could have been bought within DoD for $7.71: a 21,000 percent increase.
• $644.75 for a small gear smaller than a dime that sells for $12.51: more than a 5,100 percent increase in price.
• $71.01 for a straight, thin metal pin that DoD had on hand, unused by the tens of thousands, for 4 cents: an increase of over 177,000 percent.

As of today, the Pentagon has recovered nearly $3 million dollars of roughly $13 million in overcharges revealed in the May 2011 DoD IG report.

The Taxpayers Protection Alliance has written about waste in the Defense Industry before and has applauded other groups who have been diligent in putting a spotlight in the waste, fraud, and abuse that occurs at DoD. We are pleased to see that the Pentagon has asked for a repayment of the money they were overcharged, but it is also important for the department to continue to find responsible ways to make the necessary cuts so that their budget reflects both the mission of securing the nation, but also a path towards a more fiscally responsible outlook in the near future. It is imperative that exposing this type of waste continues so that taxpayers can feel certain they aren’t being cheated by federal agencies… or the companies the agencies do business with on a daily basis.