Boeing Overcharges U.S. Air Force for Spare Parts

WASHINGTON (Reuters) – Boeing (NYSE:BA) has been found to have overcharged the U.S. Air Force for spare parts for C-17 transport planes, including a staggering markup of 7,943% on soap dispensers, according to a report by a Pentagon watchdog.

The Department of Defense Office of Inspector General reported on Tuesday that the Air Force overpaid nearly $1 million for a dozen spare parts, which included $149,072 for an undisclosed number of lavatory soap dispensers from the U.S. planemaker and defense contractor.

Inspector General Robert Storch stated, "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. 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."

Boeing responded on Tuesday, indicating it was reviewing the report, which the company claims is based on an inappropriate comparison of prices for parts meeting military specifications versus basic commercial items that wouldn’t qualify for use on the C-17. Boeing added that a detailed written response to the report would be provided in the coming days, asserting that the spare parts were significantly modified to satisfy military specifications.

The Pentagon's budget is substantial, exceeding $900 billion last year, leading internal watchdogs to frequently encounter issues with overcharges by defense contractors—a problem that is often difficult to uncover.

The Inspector General also noted that they were unable to ascertain whether the Air Force paid a fair price for $22 million of spare parts due to the service's lack of a database containing historical prices, failure to obtain supplier quotes, or identify commercially similar parts.