Nukewatch Quarterly Winter 2013-2014

WASHINGTON, DC — Chicago based Boeing Corp., the world’s second largest military contractor, has been accused of overcharging the Pentagon for used helicopter parts passed off as new. Since 2008 government auditors have repeatedly found excessive or unjustified payments for Boeing’s Pentagon contracts. The latest fraud took place this summer, when Boeing overcharged the Army $16.6 million for selling refurbished equipment from old aircraft. Bridget Serchak, a spokeswoman for the inspector general stated, “The bottom line is that using reworked parts rather than new parts increased Boeing’s profit.” In other cases of fraud, the inspector general found the Pentagon paid Boeing $13.7 million more than it should have for spare parts, including $2,286 apiece for an aluminum “bearing sleeve” that should have cost $10. A May 2011 audit found about $13 million in overcharges on $23 million worth of orders from a Texas Army depot. That report said Boeing charged $644.75 for a plastic motor gear used on Chinook helicopters that another Pentagon unit purchased for $12.51. In 2012, Boeing did more than $30 billion worth of business with the Pentagon, and despite this investment, the lack of oversight is staggering. According to Henry Kleinknecht, the inspector general’s former director for pricing and logistics who monitored Boeing audits until last year, “Unfortunately, the Army does not have a cost/price analysis group, much less an experienced one. Government and military contracting officials don’t have the technical expertise in a lot of these complex areas to go in and figure out what the problems are.” 

— Bloomberg News & Reuters, Oct. 14, 2013