Boeing hikes soap dispenser prices by 8,000%, gouges Air Force with $1M overcharge on C-17 spare parts

Boeing overcharged the Air Force for simple spare parts on C-17 aircraft by $1 million over a four-year period, according to the Pentagon.

The defense giant marked up the cost of soap dispensers by 8,000%, putting taxpayers on the hook for such items that cost 80 times more than market value. 

While the cost that Boeing charged per dispenser was redacted from a new audit released this week, in total, the Air Force overpaid for the dispensers by $149,072 from 2018 to 2022, according to Pentagon Inspector General Robert Storch.

“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,” said Storch.

“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.” 

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An anonymous tip about the exorbitant soap dispenser prices prompted the inspector general’s audit into spare parts. 

Boeing has a 10-year contract with the Air Force that allows it to purchase the spare parts needed for C-17s and the Air Force reimburses Boeing for the spare parts. 

The IG’s review of 46 spare parts revealed that only nine, or 20%, were purchased by the Air Force at “fair and reasonable” prices, totaling $20.3 million.

The IG found that the Air Force did not pay “fair and reasonable” prices for about 26% of the spare parts reviewed, about $4.3 million worth of equipment. For another 54% of the spare parts, valued at $22 million, the IG was not able to determine whether the Air Force paid fair prices: the service branch did not maintain historical data on pricing and they were unable to obtain supplier quotes for similar products. 

The IG found the Air Force failed to validate the accuracy of data in contract negotiations for spare parts, review price increases during contract execution, and review invoices to determine whether prices were “fair and reasonable” before paying them. 

Boeing said in a statement it was reviewing the report but cautioned that it appeared to compare prices for the parts that met aircraft standards to “basic commercial items” that wouldn’t meet the qualifications for military aircraft.

“We 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.”

An Air Force spokesperson said they would implement new controls on payments. 

“The Air Force is working with the Defense Contract Management Agency to develop controls to ensure the accuracy of payments.  We are also updating contracts to include additional subcontractor information sharing.”