Market Data 
- The US Air Force majorly overpaid for C-17 spare parts, including bathroom soap dispensers, per a Pentagon watchdog.
- The dispensers were 80 times more expensive than the commercially available alternative.
- The audit of C-17 part purchases was done in response to a DoD Hotline allegation.
The US Air Force overpaid for spare parts for a C-17 military transport aircraft manufactured by Boeing, according to a new watchdog report. In one example, an audit found, the service paid more than 80 times the regular commercial value for bathroom soap dispensers.
The audit, which detailed cost issues with a variety of C-17 spare parts, blamed the overpayment on a lack of oversight by the Air Force.
On Monday, the Department of Defense Office of Inspector General released information related to an audit on whether the Air Force purchased C-17 spare parts “at fair and reasonable prices.” The audit was initiated in response to a DoD Hotline allegation.
The audit found that the Air Force “overpaid nearly $1 million for a dozen different types of spare parts” on contracts, the office said, including bathroom soap dispensers “where the Air Force paid more than 80 times the commercially available cost of a 7,943-% markup.”
Across the board, the office said the service failed to consistently pay reasonable prices for about 26% of spare parts reviewed, valued at $4.3 million.
But the OIG was unable to effectively review over half of the total spare parts — estimated at more than $22 million in value — “because the Air Force did not maintain historical cost data, and the Defense Contract Management Agency Item Group was unable to obtain supplier quotes or identify commercially similar parts,” the office said.
The OIG attributed the overpayment problem to the Air Force’s failure to sufficiently validate accurate data for contract negotiation, identify price increases while executing contracts, and review invoices to determine fair and reasonable before paying.
“We are reviewing the report, which appears to be based on an inapt comparison of the prices paid for parts that meet military specifications and designs versus basic commercial items that would not be qualified or approved for use on the C-17,” Boeing spokeswoman Deborah VanNierop told Bloomberg, which first reported the overpayments identified by the OIG.
“We will continue to work with the OIG and the US Air Force to provide a detailed written response to the report in the coming days,” she said.
Per Inspector General Robert P. Storch, the Air Force’s issues could have an impact on C-17 readiness.
“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,” he said, adding that “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 C-17 Globemaster III is a large versatile aircraft designed to transport troops and equipment across a variety of distances. It’s the Air Force’s primary strategic lift aircraft. It has also become a central aircraft in evacuation and humanitarian efforts, among other missions.
