Boeing is under federal scrutiny yet again, but this time it isn’t for midflight door malfunctions, faulty wheels, or makeshift lubricants. According to an audit released on October 29th by the Department of Defense, the beleaguered aircraft manufacturer allegedly up-charged the Air Force nearly 8,000 percent on spare soap dispensers for its fleet of C-17 cargo planes.
“The Air Force did not always pay reasonable prices… in accordance with the Federal Acquisition Regulation,” the DoD Office of Inspector General claimed in its report on Tuesday. In particular, the audit cites an unknown number of lavatory components received at a “7,943 percent markup or more than 80 times the commercially available cost.”
By its own admission, the DoD considers the Boeing C-17 Globemaster III the “Air Force’s most flexible cargo aircraft to enter the airlift force.” A total of 222 C-17’s are currently deployed across the Air Force, Air National Guard, and the Air Force Reserve Command, which have utilized them in large scale military and humanitarian missions for 30 years. Since most of those missions involve long flights, however, it’s easy to see the importance of maintaining well-stocked, clean bathrooms.
Apart from the dispensers, the most recent audit of the military’s ongoing, $35.6 billion C-17 maintenance contract focused on 45 other spare part categories including toilets and toilet doors, protective tape, and window panels. Auditors deemed a sale “fair and reasonable” if there was a maximum 25 percent markup on any given item bulk order. In this case, the report only classified nine part orders totalling $20.3 million as fair and reasonable—from there, however, things apparently got murkier. The USAF “could not determine” if another 25 spare items that collectively cost the military $22.2 million were fairly priced, while $4.3 million was spent on 9 item orders judged “not… fair or reasonable.”
“As a result, the Air Force overpaid $992,856 for 12 spare parts” on contracts between the 2018 and 2022 fiscal years, concluded auditors. The exact number of soap dispensers ordered by the USAF is redacted from the report.
[Related: Dish soap, hotel key cards, and confusion: Boeing FAA audit unearths dozens of issues.]
The Office of Inspector General attributes the taxpayer-funded oversights to a combination of issues. Among these, auditors contend USAF failed to validate contracts’ data accuracy, keep tabs on any price increases after contract execution, and review invoices before paying Boeing.
“In addition, the DoD OIG found that the DoD did not require the contracting officer to verify the accuracy of the bill of materials before negotiation or to review invoices for allowable, allocable, and reasonable costs before payment,” representatives added in an October 29th press release.
Moving forward, the OIG offered eight recommendations, most of which boiled down to paying much better attention to how much Boeing (and any other contractors) try to charge the DoD throughout contract projects, and “obtain justification… from Boeing” if any markups exceed 25 percent.
For its part, Boeing representatives announced they 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,” the company said in a statement. “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.”
