A report from the Pentagon inspector general found that Boeing massively charged the Department of Defense for spare parts on the C-17 Globemaster. The overcharging included the pricing of replacement soap dispensers at 80 times the market value.
“Specifically, for the 46 spare parts we reviewed, the Air Force paid fair and reasonable prices for nine spare parts, or 20%, valued at $20.3 million,” the report explains. “We could not determine whether the Air Force paid fair and reasonable prices for 25 spare parts, or 54%, valued at $22.2 million; and the Air Force did not pay fair and reasonable prices for 12 spare parts, or 26%, valued at $4.3 million.”
The inspector general found the overpayments to Boeing totaled about $1 million.
The Pentagon has awarded Boeing over $34 billion in sole-source contracts for the C-17 Globemaster since 2011. The Department of Defense audit was limited to looking at a small number of spare parts.
Price gouging and overcharging is an issue for the Pentagon. The Department of Justice recently announced that Raytheon would pay a $1 billion fine related to bribery and overpricing. “These schemes to defraud caused the DOD to pay Raytheon over $111 million more than Raytheon should have been paid on the contracts,” the DOJ press release on the schemes explained.
There exists a “revolving door” between the Department of Defense and the weapons makers that receive hundreds of billions in contracts from the Pentagon each year. Current Defense Secretary Lloyd Austin previously served as an executive at Raytheon after he left the military at the rank of general.
