Members of Congress cannot, however, overlook two seemingly benign provisions in the House version of the bill. If retained, Sections 811 and 812 of the House-passed NDAA would bolster contractors’ ability to price gouge the Pentagon — already a significant issue for the military. Just this week the Department of Defense (DOD) Inspector General found that Boeing overcharged the Air Force by nearly a million dollars on various products for the C-17 military transport aircraft. In one case, Boeing overcharged the military for a soap dispenser by nearly 8,000%, more than 80 times the commercial price.
Two weeks ago, the Department of Justice (DOJ) announced that Raytheon will pay nearly a billion dollars to resolve a government investigation that exposed the company for overcharging on government contracts. Whistleblowers exposed both Boeing and Raytheon for price gouging. Without them, the agencies may have never discovered that the contractors overcharged taxpayers.
Unfortunately, the true scale of military price gouging is unknown.
Sections 811 and 812 of the House NDAA are part of a decades-long effort to legalize price gouging. Congress has achieved this goal, in part, by broadening the array of products and services considered to be commercial by the Pentagon. According to the Federal Acquisition Regulation, contractors are not required to submit to the Pentagon certified cost and pricing data for commercial products and services.
Reading such articles always makes me feel ill.
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Everything installed on an aircraft has to be analyzed for safety and combustibility. You can’t just go to Home Depot and get one for $10 from there. If you’re custom building everything to unusually specific specs, it gets expensive.
Gamer and Virtual Reality pioneer Palmer Lucky now runs a defense contractor (Anduril) that tries to buy as much as possible off the shelf.
Anduril Industries - Wikipedia
intercst
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$200 hammers have been a thing at DoD for decades. I remember Senator Proxmire handing out “golden fleece” awards. There were flox of examples, including an astonishing price paid for replacement rubber feet for stools used on Boeing built AWACS aircraft. Part of the problem was said to be DoD procedures intended to enforce accountability. When the AF needed those stool feet, procedure required them to send the PO to Boeing, Boeing then sent a PO to the vendor for the stool. The stool vendor then sent a PO to the vendor for the feet. Then the feet were marked up to provide a “reasonable” profit, on top of the cost of all the paper shuffling, by the foot vendor, then the stool vendor, then Boeing. Because there could be “fraud”, if an AF maintenance officer took money out of petty cash and drove down to the local hardware to pick up feet that would work.
But, at least, forty years ago, stuff was actually built and deployed. Now, stuff hardly gets built and deployed at all. Most of the money goes into “development”.
Steve
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Until it was discovered they were not “hammers” but rather marking tools used by govt inspectors to indicate the item had been inspected–per Congress. Each “hammer” was expensive because it needed to be a unique identifier for each inspector (i.e. no duplicate “hammers”). Thank Congress–but nobody bothered to mention the items were produced to Congressional spec until long after the screeching ended.
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I have mentioned before that defense contractor Boards are packed with retired politicians, Admirals, and Generals.
Steve
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