Boeing, the defense giant, has come under fire after a Pentagon audit revealed the company overcharged the Air Force by over $1 million for simple spare parts on C-17 aircraft over a four-year period. The audit, conducted by the Pentagon Inspector General Robert Storch, found that Boeing marked up the cost of items like soap dispensers by a staggering 8,000%, forcing taxpayers to pay 80 times more than their market value.
While the exact cost of each soap dispenser was redacted from the audit, the Air Force overpaid for them by a total of $149,072 from 2018 to 2022. The audit also found that the Air Force failed to adequately monitor Boeing’s pricing practices and did not have sufficient internal controls to prevent overpayments for spare parts.
“The Air Force needs to establish and implement more effective internal controls to help prevent overpaying for spare parts for the remainder of this contract, which continues through 2031,” said Storch. “Significant overpayments for spare parts may reduce the number of spare parts that Boeing can purchase on the contract, potentially reducing C-17 readiness worldwide.”
The audit was prompted by an anonymous tip about the exorbitant prices of spare parts. Boeing has a 10-year contract with the Air Force that allows the company to purchase spare parts for C-17 aircraft, with the Air Force reimbursing Boeing for the costs. However, the audit found that the Air Force did not pay “fair and reasonable” prices for 26% of the spare parts reviewed, amounting to $4.3 million worth of equipment.
The audit also found that for 54% of the spare parts, valued at $22 million, the Air Force could not determine whether they had paid fair prices because the service branch lacked historical data on pricing and was unable to obtain supplier quotes for similar products. This highlights a significant lapse in the Air Force’s procurement process and its ability to ensure taxpayer money is spent efficiently.
Boeing, in response to the audit, stated they were reviewing the report and countered that the audit appears to have compared the prices of parts that met aircraft standards with “basic commercial items” that would not meet the qualifications for military aircraft.
“We are reviewing the report, which appears to be based on an inapt comparison of the prices paid for parts that meet aircraft and contract specifications and designs versus basic commercial items that would not be qualified or approved for use on the C-17. We will continue to work with the OIG and the U.S. Air Force to provide a detailed written response to the report in the coming days.”
This latest controversy adds to Boeing’s recent challenges. The company is currently facing a strike by its workers and is dealing with issues with its Starliner mission. With the Pentagon’s budget exceeding $900 billion last year, overcharges by defense contractors remain a persistent problem for internal watchdogs. Earlier this month, Raytheon, another defense giant, agreed to pay $1 billion to settle a lawsuit with the Department of Justice for defrauding the Defense Department and bribing a government official in Qatar. This case highlighted the ongoing issue of inflated costs and corruption within the defense industry, raising questions about the government’s oversight of these contracts.
This recent audit of Boeing’s spare parts pricing raises serious concerns about the company’s business practices and the Air Force’s ability to effectively monitor and manage its contracts. As the Air Force continues to rely heavily on the C-17 for vital missions, ensuring fair and reasonable pricing for spare parts is essential for maintaining the aircraft’s readiness and ensuring taxpayer money is spent responsibly.
