Boeing has reportedly overcharged the U.S. Air Force by close to $1 million for spare parts related to C-17 cargo planes. Among the discrepancies noted, an astonishing 8,000% markup on simple lavatory soap dispensers was highlighted by the Pentagon’s inspector general.
The audit carried out by the Defense Department’s auditor encompassed a price analysis of 46 spare parts for the C-17 aircraft between 2018 and 2022. The findings revealed that out of the 46 parts, 12 were deemed overpriced, while prices for nine appeared to be reasonable. The prices of the remaining 25 items could not be fairly assessed.
Following an anonymous tip, the Office of the Inspector General especially scrutinized the prices attached to the soap dispensers. Boeing, however, has pushed back against the findings of the report, asserting that the evaluations were flawed.
“Our review of the report indicates it is based on an inappropriate comparison between prices for parts that align with aircraft specifications and basic commercial items not suitable for use in the C-17,” Boeing stated. The company emphasized its commitment to collaborating with the Inspector General’s office and the Air Force to provide a comprehensive rebuttal to the report in due course.
The C-17 Globemaster stands as one of the largest cargo aircraft in the U.S. military fleet. Its versatility allows it to transport military vehicles, substantial shipments of humanitarian aid, or even a large number of civilians when required. Notably, during the tumultuous evacuation from Afghanistan in August 2021, C-17 planes operated nonstop, assisting in the escape of over 120,000 individuals fleeing the advancing Taliban forces.
Since 2011, Boeing has secured more than $30 billion in contracts from the U.S. government for spare parts needed for the C-17, with the Air Force covering these expenses.
The company has faced substantial challenges since the tragic crashes of the 737 Max, which took place in 2018 and 2019, leading to significant financial and reputational harm.
This year has proven to be particularly tumultuous for Boeing, which faced intense scrutiny after a door plug detached from a 737 Max during an Alaska Airlines flight in January, prompting federal regulatory investigations and limitations on production of the aircraft.
Additionally, in July, Boeing consented to plead guilty to conspiracy charges related to misleading government regulators about pilot training procedures for the 737 Max. This plea agreement is currently awaiting approval from a federal judge in Texas.
Boeing has experienced instability at the executive level, with its third CEO in five years, an external hire who joined in August. Last week, the company reported a staggering loss exceeding $6 billion for the third quarter, attributed to various charges concerning its commercial, defense, and space operations.
The ongoing strike by 33,000 union machinists has entered its seventh week, severely impacting the production lines for the 737, 777, and 767 cargo planes, restricting essential cash flow. CEO Kelly Ortberg has announced plans to lay off approximately 17,000 employees and intends to issue new stock aimed at generating up to $19 billion to stabilize its burdened balance sheet.
