Boeing, BA, has overcharged the Air Force by nearly 8,000% for soap dispensers

Boeing (BA.N) overcharged the U.S. Air Force for spare parts for C-17 transport planes, including marking up the price of soap dispensers by 7,943%, according to a report from a Pentagon watchdog.

On Tuesday, the Department of Defense Office of Inspector General revealed that the Air Force overpaid nearly $1 million for a dozen spare parts, including $149,072 for an undisclosed quantity of lavatory soap dispensers supplied by the U.S. aircraft manufacturer and defense contractor.

Inspector General Robert Storch emphasized the need for the Air Force to "establish and implement more effective internal controls" to prevent future overpayments, as the current contract with Boeing runs until 2031. He warned that such overpayments could potentially limit the number of spare parts Boeing can purchase under the contract, which may in turn affect C-17 readiness globally.

Boeing responded to the report, stating that it is currently reviewing the findings. The company suggested the report was "based on an inappropriate comparison" of prices for parts designed to meet military specifications versus basic commercial items, which would not be approved for use on the C-17 aircraft. Boeing plans to issue a detailed written response soon, asserting that the parts in question were significantly modified to meet the required military standards.

The Pentagon's budget, which exceeded $900 billion last year, makes overcharges by defense contractors a persistent challenge for internal auditors, though these cases can be hard to identify. Additionally, the Inspector General noted that it was unable to assess whether the Air Force paid a fair price for $22 million worth of spare parts due to the lack of historical pricing records, supplier quotes, or comparable commercial items.