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Pentagon Parts Prices Balloon Under Reinventing Government

September 2, 1999 


Defense contractors are taking advantage of new opportunities to rip-off the federal government under policy reforms instituted by Clinton/Gore's Reinventing Government campaign and an industry-chummy Congress. Spare parts prices have ballooned by up to fifteen times (or 1,532%) by contractors like Boeing and AlliedSignal taking advantage of lax accounting and oversight under federal policy changes.

The agencies successful at reining in industry fraud have been the target of these changes. New research shows that they have experienced some of the most severe cutbacks and disabling reforms including:

  • 19% cut in staff positions at the Defense Contract Audit Agency (DCAA) which "saves almost $10 for each dollar invested";
  • 21% cut in the Department of Defense Inspector General's (IG) office which recovered $466 million in FY 1996-97 fraud investigations; and
  • 1/3 cut in staff at the General Accounting Office (GAO), which played a central role in saving $1.7 billion from the troubled F-22 program.

"Reinventing Government was supposed to streamline and get rid of wasteful jobs. In reality, the fraud-busting pocket-protector crowd has become an endangered species thanks to the defense industry's political maneuvering," according to Marcus Corbin, defense analyst.

The $435 hammer and the $640 toilet seat made the problem of defense contractor fraud famous in the 1980s. Overpriced spare parts as a story are now making a comeback:

  • Just this year, AlliedSignal was found to have overcharged the government by as much as 618% for spare parts, and on its overall contract by 54.5%;
  • Boeing charged $403 for a metal cylinder that normally would cost $25 (a 1,532% markup);
  • A $47 bell went for $714 and a 57¢ screw cost the government $76.

Copies of Defense Waste and Fraud Camouflaged as Reinventing Government are available from the Project On Government Oversight (POGO).

Founded in 1981, POGO's mission is to investigate, expose, and remedy abuses of power, mismanagement, and subservience by the federal government to powerful special interests. POGO is known for exposing overpriced spare parts scandals of the 1980s such as the hammer and $7,600 coffee-maker.

Founded in 1981, the Project On Government Oversight (POGO) is a nonpartisan independent watchdog that champions good government reforms. POGO's investigations into corruption, misconduct, and conflicts of interest achieve a more effective, accountable, open, and ethical federal government.

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