Sue Hartigan <[EMAIL PROTECTED]> writes: Audit Finds More Pentagon Waste > WASHINGTON (AP) -- More news from the home of the $640 > toilet seat: The Pentagon's watchdog said Wednesday that > a new purchasing system designed to save money produced > millions of dollars in overpriced spare parts, including > a $76 screw and a $714 electrical bell. > > Inspector General Eleanor Hill, whose job it is to > police for waste and fraud at the Defense Department, > said two audits found that the problem wasn't caused by > contractor gouging seen in past abuses but by Pentagon > errors. > > She said that while employing a new purchasing system > similar to that used in the commercial sector, Pentagon > buyers failed to drive a hard bargain, neglected to find > parts that were available from competitors for lower > prices and bought large quantities of parts without > getting bulk discounts. > > ``Department of Defense procurement approaches were > poorly conceived, badly coordinated and did not result > in the government getting good value for the prices paid > both for commercial and noncommercial items,'' Hill told > a Senate Armed Services subcommittee. > > ``We found considerable evidence that the Department of > Defense had not yet learned how to be an astute buyer in > the commercial market place,'' she said. > > The Pentagon's acquisition chief, Jacques S. Gansler, > told senators that the audit found ``isolated > instances'' in a new system that has saved taxpayers > money while purchasing tens of billions of dollars worth > of equipment. > > ``In the overwhelming majority of cases, using > commercial practices and buying commercial items has > paid huge dividends,'' Gansler said. > > The inspector general said the review was based on tips > received on a fraud hot line about purchases from two > contractors. > > But Hill said neither contractor, Sundstrand Corp. of > Rockford, Ill., and Seattle-based Boeing Co., violated > any laws. And Boeing said it charged the Pentagon the > same prices advertised to price-conscious commercial > airlines. > > Nonetheless, Hill cited several examples of overpriced > parts: > > --$714 each for 108 electrical bells previously priced > at $47. > > --$5.41 for each of 1,844 screw thread inserts, compared > to a previous price of 29 cents. > > --$1.24 for each of 31,108 springs previously priced at > five cents. > > --$75.60 for each of 187 set screws previously priced at > 57 cents. > > --$403 each for 246 actuator sleeves priced earlier at > $24.72. > > ``This is a story that looks a whole lot worse than it > is,'' said Boeing spokesman Dick Dalton. ``There isn't a > suggestion of any improper activity on Boeing's part.'' > > The lower prices cited by the audits, Dalton said, date > back 15 to 20 years and were based on a completely > different supply system in which the Pentagon bought > large quantities at cheaper prices and then bore the > storage costs. > > Under the new system, Boeing delivers parts in small > quantities on short notice as needed. Such a system > entails extra costs that show up in the price but it > saves the buyer huge inventory expenses, Dalton said. > > ``These are parts that frequently require precision > machining, aerospace tolerances, and materials that are > specifically for the aerospace industry,'' Dalton said. > > Critics of defense spending practices weren't buying > that argument. > > ``This is deja voodoo pricing by defense contractors,'' > said Sen. Chuck Grassley, R-Iowa. Defense purchasing > reforms have failed, Grassley said, ``because the > defense industry is constantly successful in watering > down the reforms.'' > > Danielle Brian of the Project on Government Oversight, a > group that has sharply criticized Pentagon buying > practices, said the audits ``confirm our worst fears -- > that acquisition reform was really a deal for defense > contractors and not for taxpayers.'' > > In the case of Sundstrand, the Pentagon's Defense > Logistics Agency bought items from the company catalog > for higher prices than the military had previously paid > for the same items. > > The higher prices were paid, in part, because the agency > failed to obtain cost data from Sundstrand, according to > the audit. In addition, the Pentagon made repeated > purchases, ultimately amounting to large quantities, > without using its big-buyer leverage to demand > discounts. > > Hill, citing concerns about the release of proprietary > information, did not release the actual audits. The > audit summaries were obtained by The Associated Press. > > The Sundstrand audit concerned $23 million in purchases > of aircraft spare parts, including pistons, gearshifts, > gears, bearing bolts and springs. > > In one contract, the Pentagon paid $6.1 million for > commercial parts that should have cost just $1.6 million > under the Pentagon's ``fair and reasonable'' pricing > standard, a 280-percent markup, the audit said. > > Sundstrand spokesman Patrick Winn said the audit made > ``apples-to-oranges comparisons which do not recognize > or reflect the significant administrative and cost > savings inherent'' in the Pentagon's new purchasing > system. > > The Boeing audit focused on 179 delivery orders totaling > $12 million for structural panels, fittings, supports, > washers, nuts and bolts for a variety of aircraft. Most > were parts for military and commercial versions of the > Boeing 707. > > On three contracts, the Pentagon paid Boeing $5 million > for parts that the inspector general said should have > cost $2.8 million. > -- Two rules in life: 1. Don't tell people everything you know. 2. Subscribe/Unsubscribe, email: [EMAIL PROTECTED] In the body of the message enter: subscribe/unsubscribe law-issues
