Boeing Gouged Air Force With 8,000% Markup on Soap Dispensers: Pentagon - Newsweek

A Pentagon audit released this week found Boeing overcharged the Air Force for spare parts on cargo planes, including an increase on the price for lavatory soap dispensers by nearly 8,000 percent.

The Pentagon's inspector general on Tuesday said the audit showed the company overcharged the Air Force by nearly $1 million for different parts for C-17 cargo planes. Among the C-17 parts singled out in the report were soap dispensers, which the Air Force reportedly overpaid for by $149,072. This amount for the undisclosed amount of dispensers came due to an alleged 7,943 percent markup.

"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," Pentagon Inspector General Robert Storch said in a statement. "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."

In a press release, the Department of Defense Office of Inspector General (DoD OIG) said it has made eight recommendations based on the audit's findings. These include having the Commander of the Air Force Life Cycle Management Center direct the C-17 contracting officer to review spare parts prices throughout the execution of the C-17 PBL contract, along with determining "whether price increases of 25 percent or above occurred, and obtain justification of the price increases from Boeing."

"The DoD OIG will continue to monitor the DoD's progress towards implementation of these recommendations," the Pentagon's release added.

Boeing has disputed the findings of the audit.

In a statement provided to The Associated Press (AP), the defense company said they are "reviewing the report, which appears to be based on an inapt comparison of the prices paid for parts that meet aircraft and contract specifications and designs versus basic commercial items that would not be qualified or approved for use on the C-17."

"We will continue to work with the OIG and the U.S. Air Force to provide a detailed written response to the report in the coming days."

Boeing has received negative publicity throughout the year, including after federal investigations were launched after a door plug flew off a 737 Max during an Alaska Airlines flight in January.

Months later, the company agreed to plead guilty to a felony count of conspiracy to defraud the government for misleading regulators regarding pilot training rules for the 737 Max. A plea deal in the case is currently pending.

More recently, an ongoing strike by union machinists has affected Boeing's production of 737s, 777s and 767 freighters, and the company earlier this month announced it would cut approximately 17,000 jobs.

This article includes reporting from The Associated Press.