Waste of the Day: USAF pays millions for soap dispensers

The Air Force spent nearly a million dollars too much for spare parts for its C-17 cargo planes, often at 10,000 percent markup.

Topline: The Air Force has been building its C-17 cargo planes since 2011, but officials are not taking enough steps to keep prices fair and reasonable, according to a new report from the Department of Defense Inspector General.

Severe markups for C-17 spare parts

The Air Force overpaid $992,856 for 12 kinds of spare parts, including soap dispensers marked up by 7,943%.

Key facts: The parts were sold by Boeing as part of two manufacturing contracts spanning 20 years and worth $35.6 billion. The IG redacted the unit prices and provided only topline dollar figures.

The Air Force overpaid by almost $6,000, or 10,319% above market value, for machine screws. They spent 1,425% too much for desktop fans, amounting to almost $50,000.

Boeing also overcharged the Air Force for tape, pressure transmitters, dust and moisture plugs and more, representing 26% of all spare parts bought for the C-17 planes.

Auditors could only confirm that the Air Force paid fair prices for 20% of the parts. For the remaining 54%, auditors “could not determine” if prices were fair because there were no comparable sales.

Federal law states that a reasonable cost does “not exceed that which would be incurred by a prudent person in the conduct of competitive business,” auditors wrote. But the DoD does not issue “clear requirements” for purchasing officers to determine if costs are actually fair, according to the audit.

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Almost every outside company overcharges the Pentagon

Critical quote: “Until the Air Force establishes controls to require contracting officials to review spare parts purchases throughout the execution of the contract, the Air Force will continue to overpay for spare parts for the remainder of the contract,” auditors wrote. “As a result, this could lead to a reduction in readiness and result in the C‑17 not being able to accomplish its mission. 

Background: The C-17 contract is not an anomaly. The DoD is overcharged on “almost everything” it buys from outside companies, according to former chief contract negotiator Shy Assad. That includes most of the weapons sent to Ukraine since February 2022, Assad told CBS News.

Part of the problem is that many suppliers have a near-monopoly in their field. The so-called “Big Five” defense contractors accounted for 15% of all military spending from 2019 to 2023, according to federal data reviewed by OpenTheBooks.com.

Summary: The U.S. has the world’s most expensive military not only because of its size, but because of the absurd business practices that have become commonplace at the Pentagon. 

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This article was originally published by RCI and made available via RealClearWire.