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Boeing overbilled Army, says inspector

WASHINGTON — Boeing charged the Army excessive prices for helicopter spare parts, including $644.75 for a tiny black plastic motor gear that cost another Pentagon agency $12.51, according to a report by the Defense Department's inspector general.

Boeing earlier this year refunded $556,006 on the "spur gear" after an audit draft was issued. The second-largest defense contractor issued an additional $76,849 Army refund for a dime-size, plastic "roller assembly" that costs $7.71; Boeing charged the Army $1,678.61 apiece. Both are installed on the CH-47 Chinook helicopter.

The refunds were among $1.6 million that Boeing made during the auditing phase or after the draft was issued. The audit cites excessively priced parts or costs based on pricing data that wasn't current, complete or accurate from Boeing's two Corpus Christi, Texas, Army depot contracts valued at about $970 million.

The Army also is failing to tap as much as $277 million in excess inventory maintained by the Defense Logistics Agency that costs less in many cases, the audit said.

"Anytime we see indications that DoD is paying inflated prices for parts that it already has in inventory we are concerned," Deputy Inspector General for Auditing Daniel Blair said in an e-mail statement.

"This report highlights some serious challenges that the Department must address which could result in hundreds of millions of dollars in savings," Blair said. "Based on some preliminary analysis, we have indications that several other weapons systems have similar problems with excess inventory and defective pricing."

Overall, based on a sample of 18 "high-dollar parts" used to maintain Army helicopters at Boeing's facilities in Philadelphia and Mesa, Ariz., "we calculated that Boeing charged the Army about $13 million, or 131.5 percent more than fair and reasonable prices," on $23 million in orders, according to an audit summary released Tuesday.

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