​Boeing $13.7 Million Repay For Excessive Prices Charged On Parts

Boeing $13.7 Million Repay
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June 19, 2013
Also: $13.7 Million, Boeing, Boeing $13.7 Million Repay, Defense Contract Audit Agency, Michelle McCaskill, Pentagon, Repay

Boeing is facing scrutiny for $13.7 million it has to repay to the Pentagon’s purchasing agency for excessive prices charged on spare parts, including a $10 device for which the defense contractor charged $2,286 apiece.

Boeing $13.7 Million Repay

Spokeswoman Michelle McCaskill said the Defense Logistics Agency “is seeking a refund from Boeing,” and added, “The refund will be for the full $13.7 million identified” and will be requested by July 31, she said.

The agency overpaid about $1.3 million for 573 of the aluminum “bearing sleeves” used on an aircraft’s main landing-gear door that should have cost $10 each, the Pentagon’s inspector general said in an audit labeled “For Official Use Only.”

Wasteful spending resulted from agency personnel failing to negotiate good deals or to perform adequate oversight, and from Boeing’s failure to pass on savings it won from subcontractors, according to the complete audit report. A summary of the findings was reported by Bloomberg News on June 7.

Boeing “has been working with the Defense Logistics Agency” and the inspector general “throughout the audit process,” Ellen Buhr, a spokeswoman for Boeing’s Global Services and Support unit, said in an e-mailed statement. “We are working with DLA to review the official report and to understand the issues identified.”

The audit marks the second time in two years that the inspector general has cited excessive parts pricing by Chicago-based Boeing, the Pentagon’s second-biggest contractor after Lockheed Martin Corp. (LMT) A May 2011 inspector general’s audit of two Boeing contracts for an Army depot in Corpus Christi, Texas, found about $13 million in overcharges on $23 million in orders.

The Pentagon has recovered $2.67 million in that case, according to Bridget Serchak, a spokeswoman for the inspector general’s office. The Defense Contract Audit Agency is reviewing the contract to see if more refunds are in order, another spokeswoman, Army Lieutenant Colonel Elizabeth Robbins, said in an e-mailed statement.

In the more recent audit, the inspector general took what it described as a “nonstatistical sample” of 60 spare parts on 2,659 delivery orders valued at about $81.1 million and found issues involving prices for parts on 1,469 orders valued at $27.2 million.

The sample was part of almost 3,400 spare parts valued at about $142 million that the agency had purchased.

The excessive prices were found on a sample of parts requested under a 2009 “basic ordering agreement” for components and assemblies used on B-1B and B-52 bombers, E-3 surveillance aircraft, KC-135 tankers, Minuteman nuclear missiles and AC-130U gunships.