Department of Defense Inspector General Reports
Questioning Spare Part Costs
Report

1

Costs Questioned

Review of Parts Purchased From
TransDigm Group, Inc. (February
25, 2019)

TransDigm “earned $16.1 million in
excess profits for 46 parts” sold for
$26.2 million.1 The majority of spare
parts contracts were under the
simplified acquisition or the Truth in
Negotiations Act (TINA) thresholds.2
Four spare parts were designated as
commercial items.3

Followup Audit: Military Sealift
Command Management of Spare
Parts Inventory and Purchases for
Sealift Program Roll-On/Roll-Off
Ships (October 20, 2017)

“Officials could not provide evidence
that the contractor adequately
competed or provided justification
for not competing 3 of the 9
purchases over $25,000 or 5 of the
12 purchases between $3,000 and
$25,000, made during FY 2016.”5

The Air Force Did Not Adequately
Determine or Document Fair and
Reasonable Prices for Lot 7 SoleSource Initial Spare Parts for the
C-5 Aircraft (February 7, 2017)

“[The Air Force’s] contracting officer
may not have purchased the 11
commercial spare parts, valued at
$58.8 million, from LM Aero at fair
and reasonable prices.”7

Efforts to Obtain Cost
or Pricing Data
“When contacting
officers requested cost
data for 16 of the 47
contracts we reviewed,
TransDigm denied 15
requests for uncertified
cost data and fulfilled
only the request for
certified cost data for
the one contract above
the TINA threshold that
had no exceptions.”4
“This occurred because
the contracting officer
did not provide
adequate oversight of
the contractor to ensure
compliance with the
competition
requirements for the
contract.”6
Air Force officials
requested, but did not
obtain sales data or only
reviewed certain
invoices and price data

Department of Defense Inspector General, Review of Parts Purchased From TransDigm Group, Inc., February 25,
2019, p. iii. https://media.defense.gov/2019/Feb/27/2002093922/-1/-1/1/DODIG-2019-060.PDF
2
Department of Defense Inspector General, Review of Parts Purchased From TransDigm Group, Inc., February 25,
2019, p. 11. https://media.defense.gov/2019/Feb/27/2002093922/-1/-1/1/DODIG-2019-060.PDF
3
Department of Defense Inspector General, Review of Parts Purchased From TransDigm Group, Inc., February 25,
2019, p. 32. https://media.defense.gov/2019/Feb/27/2002093922/-1/-1/1/DODIG-2019-060.PDF
4
Department of Defense Inspector General, Review of Parts Purchased From TransDigm Group, Inc., February 25,
2019, p. 8. https://media.defense.gov/2019/Feb/27/2002093922/-1/-1/1/DODIG-2019-060.PDF
5
Department of Defense Inspector General, Followup Audit: Military Sealift Command Management of Spare Parts
Inventory and Purchases for Sealift Program Roll-On/Roll-Off Ships, October 20, 2017, p. i.
https://media.defense.gov/2017/Nov/16/2001844769/-1/-1/1/DODIG-2018-004.PDF
6
Department of Defense Inspector General, Followup Audit: Military Sealift Command Management of Spare Parts
Inventory and Purchases for Sealift Program Roll-On/Roll-Off Ships, October 20, 2017, p. 6.
https://media.defense.gov/2017/Nov/16/2001844769/-1/-1/1/DODIG-2018-004.PDF
7
Department of Defense Inspector General, The Air Force Did Not Adequately Determine or Document Fair and
Reasonable Prices for Lot 7 Sole-Source Initial Spare Parts, February 7, 2017, p. i.
https://media.defense.gov/2017/Feb/07/2001714317/-1/-1/1/DODIG-2017-053.pdf

 U.S. Air Force Spent Billions on
F117 Engine Sustainment Without
Knowing What a Fair Price Was
(March 11, 2016)

8

The audit reviewed whether the Air
Force purchased sole-source
commercial F117 engine sustainment
services at fair and reasonable
prices.11 “The Air Force spent
$[REDACTED] billion on F117 engine
sustainment services for FY 2012
through FY 2014 without knowing
whether it paid a fair and reasonable
price.”12 But DoD IG had previously
estimated the Air Force would pay
$3.76 billion over the next 7 years.13

in the subcontractor’s
office (and had to sign a
nondisclosure
agreement).8 The sales
data officials relied on
“did not justify the
contract prices for 3 of
the 11 commercial spare
parts reviewed, valued
at $9.2 million.”9 The Air
Force should “assess and
determine whether it is
appropriate to request a
$5.3 million voluntary
refund.”10
“Pratt & Whitney
provided limited data on
one commercial
customer. However,
Pratt & Whitney did not
provide requested cost
data because of
concerns about
appropriate safeguards
to protect the data so
that the Air Force could
not obtain and use data

Department of Defense Inspector General, The Air Force Did Not Adequately Determine or Document Fair and
Reasonable Prices for Lot 7 Sole-Source Initial Spare Parts for the C-5 Aircraft, February 7, 2017, pp. 7, 8.
https://media.defense.gov/2017/Feb/07/2001714317/-1/-1/1/DODIG-2017-053.pdf
9
Department of Defense Inspector General, The Air Force Did Not Adequately Determine or Document Fair and
Reasonable Prices for Lot 7 Sole-Source Initial Spare Parts for the C-5 Aircraft, February 7, 2017, p. 8.
https://media.defense.gov/2017/Feb/07/2001714317/-1/-1/1/DODIG-2017-053.pdf
10
Department of Defense Inspector General, The Air Force Did Not Adequately Determine or Document Fair and
Reasonable Prices for Lot 7 Sole-Source Initial Spare Parts for the C-5 Aircraft, February 7, 2017, p. 10.
https://media.defense.gov/2017/Feb/07/2001714317/-1/-1/1/DODIG-2017-053.pdf
11
Department of Defense Inspector General, U.S. Air Force Spent Billions on F117 Engine Sustainment Without
Knowing What a Fair Price Was, March 11, 2016, p. i. https://media.defense.gov/2016/Mar/11/2001714219/-1/1/1/DODIG-2016-059.pdf
12
Department of Defense Inspector General, U.S. Air Force Spent Billions on F117 Engine Sustainment Without
Knowing What a Fair Price Was, March 11, 2016, p. v. https://media.defense.gov/2016/Mar/11/2001714219/-1/1/1/DODIG-2016-059.pdf
13
Department of Defense Inspector General, U.S. Air Force May Be Paying Too Much For F117 Engine Sustainment,
December 22, 2014, p. iv. http://www.pogoarchives.org/straus/dodig-f117engine-20150224.pdf

 Defense Logistics Agency Did Not
Appropriately Determine Fair and
Reasonable Prices for F108 Engine
Sole-Source Commercial Parts
(February 16, 2016)

“The contracting officer did not
request or obtain additional data
necessary to determine if the
maximum value contract price of
nearly $1 billion was fair and
reasonable” on the sole-source
commercial contract.15

Defense Logistics Agency Aviation
Generally Purchased Sole-Source
Spare Parts From the General
Electric Company at Fair and
Reasonable Prices, but

While prices were largely fair and
reasonable, “the contracting officer
did not adequately support the
commercial item determinations
[including missteps related to prior
commercial determinations] for sole-

14

in pending contract
negotiations.”14
“The contracting officer
did not request
additional data to
support CFM’s proposed
prices prior to
acceptance. … CFM
officials informed her
multiple times they did
not have cost data.
Therefore, the
contracting officer
assumed she would not
receive cost data if she
requested the
information.”16 The
contracting officer also
stated that she did not
request the data
“because she would
have to elevate any
denials, adding time to
the contract award
process. Further, the
contracting officer
stated that she was not
willing to miss her
contract award
milestones.”17
“The contracting officer
requested that GE
provide other-thancertified cost or pricing

Department of Defense Inspector General, U.S. Air Force Spent Billions on F117 Engine Sustainment Without
Knowing What a Fair Price Was, March 11, 2016, p. 1. https://media.defense.gov/2016/Mar/11/2001714219/-1/1/1/DODIG-2016-059.pdf
15
Department of Defense Inspector General, Defense Logistics Agency Did Not Appropriately Determine Fair and
Reasonable Prices for F108 Engine Sole-Source Commercial Parts, February 16, 2016, p. i.
https://media.defense.gov/2018/Nov/08/2002061137/-1/-1/1/DODIG-2016-047%20(REDACTED).PDF
16
Department of Defense Inspector General, Defense Logistics Agency Did Not Appropriately Determine Fair and
Reasonable Prices for F108 Engine Sole-Source Commercial Parts, February 16, 2016, p. 13.
https://media.defense.gov/2018/Nov/08/2002061137/-1/-1/1/DODIG-2016-047%20(REDACTED).PDF
17
Department of Defense Inspector General, Defense Logistics Agency Did Not Appropriately Determine Fair and
Reasonable Prices for F108 Engine Sole-Source Commercial Parts, February 16, 2016, p. 14.
https://media.defense.gov/2018/Nov/08/2002061137/-1/-1/1/DODIG-2016-047%20(REDACTED).PDF

 Improvements Could Be Made
(July 24, 2015)

Improvements Needed on DoD
Procurements from Robertson
Fuel Systems (June 25, 2015)

Defense Logistics Agency Did Not
Obtain Fair and Reasonable Prices
for Meggitt Aircraft Braking
Systems for Sole-Source
Commercial Spare Parts (May 8,
2015)

18

source spare parts. … As a result, the
contracting officer may not obtain
the appropriate cost or pricing data
required to develop an effective
bargaining position during future
negotiations.”18
“Contracting officers applied the
commercial item definition to items
procured on Robertson sole-source
contracts without evidence of
commercial sales and without
evidence that the item was of a type
customarily used by the general
public. This inhibited the contracting
officers’ ability to develop an
effective bargaining position and
gave the contractor significant
control in contract negotiations. In
addition, DoD did not obtain the
necessary data to determine if the
$77 million it spent on these
contracts was fair and reasonable.”20

Contracting officers relied on
previous contract prices and did not
adequately document that parts
were commercial. “As a result, DLA
potentially overpaid … approximately
$8.5 million of $17 million paid for 32
sole-source commercial spare parts
reviewed. In addition, DLA may
overpay as much as $70.5 million on
47 of 51 parts over the remaining
term of the contract. When projected
across the contract for all 5 years,

data,” which was
obtained.19

“Contracting officers did
not request, or
Robertson refused to
provide, other-thancertified cost or pricing
data to support fair and
reasonable price
determinations. … After
Robertson refused to
provide additional cost
data to support price
reasonableness, ACC
contracting officials
elevated one contract to
the Director, Defense
Pricing.” The Director
was able to get the
company to provide
additional information.21
“The contracting officer
stated he did not
request cost data from
the MABS companies to
further support the
proposed prices of
specific parts because
the MABS companies
had historically refused
to provide cost data to
DoD to support their

Department of Defense Inspector General, Defense Logistics Agency Aviation Generally Purchased Sole-Source
Spare Parts From the General Electric Company at Fair and Reasonable Prices, but Improvements Could Be Made,
July 24, 2015, p. 4. https://media.defense.gov/2015/Jul/24/2001714150/-1/-1/1/DODIG-2015-153.pdf
19
Department of Defense Inspector General, Defense Logistics Agency Aviation Generally Purchased Sole-Source
Spare Parts From the General Electric Company at Fair and Reasonable Prices, but Improvements Could Be Made,
July 24, 2015, pp. 6, 10-11. https://media.defense.gov/2015/Jul/24/2001714150/-1/-1/1/DODIG-2015-153.pdf
20
Department of Defense Inspector General, Improvements Needed on DoD Procurements from Robertson Fuel
Systems, June 25, 2015, p. i. https://media.defense.gov/2015/Jun/25/2001713514/-1/-1/1/DODIG-2015-137.pdf
21
Department of Defense Inspector General, Improvements Needed on DoD Procurements from Robertson Fuel
Systems, June 25, 2015, p. 11. https://media.defense.gov/2015/Jun/25/2001713514/-1/-1/1/DODIG-2015-137.pdf

 U.S. Air Force May be Paying Too
Much for F117 Engine
Sustainment (December 22, 2014)

22

DLA will overpay approximately
$106.8 of $294.9 million.”22
Pratt and Whitney refusing to
provide information to evaluate F117
engine sustainment services meant
the Air Force “does not know
whether the $1.54 billion already
spent … or if the estimated billions of
dollars it intends to spend over the
next 7 years is a fair and reasonable
price.”24 The F117 engine
sustainment contract was sole-source
and commercial.25

commercial parts
prices.”23
“[Air Force] contracting
officials repeatedly
requested commercial
sales and cost data to
support the price for
F117 engine sustainment
services. Pratt and
Whitney repeatedly
refused to provide it. To
assist [Air Force]
contracting officials,
senior DoD and AF
leadership requested
this data but were also
unsuccessful.”26 The IG
also found that “Pratt
and Whitney’s
unwillingness to provide
requested sales and cost
data exploited the solesource situation and
may have resulted in the
AF paying unreasonable
prices for F117 engine
sustainment services.”27
When asked by the IG
for cost data, Pratt and
Whitney refused,
arguing that such data
could be used by the Air
Force in forthcoming
negotiations and

Department of Defense Inspector General, Defense Logistics Agency Did Not Obtain Fair and Reasonable Prices
for Meggitt Aircraft Braking Systems for Sole-Source Commercial Spare Parts, May 8, 2015, p. i.
https://media.defense.gov/2015/May/08/2001713503/-1/-1/1/DODIG-2015-120.pdf
23
Department of Defense Inspector General, Defense Logistics Agency Did Not Obtain Fair and Reasonable Prices
for Meggitt Aircraft Braking Systems for Sole-Source Commercial Spare Parts, May 8, 2015, p. 17.
https://media.defense.gov/2015/May/08/2001713503/-1/-1/1/DODIG-2015-120.pdf
24
Department of Defense Inspector General, U.S. Air Force May Be Paying Too Much For F117 Engine Sustainment,
December 22, 2014, p. i. https://media.defense.gov/2014/Dec/22/2001713454/-1/-1/1/DODIG-2015-058.pdf
25
Department of Defense Inspector General, U.S. Air Force May Be Paying Too Much For F117 Engine Sustainment,
December 22, 2014, p. i. https://media.defense.gov/2014/Dec/22/2001713454/-1/-1/1/DODIG-2015-058.pdf
26
Department of Defense Inspector General, U.S. Air Force May Be Paying Too Much For F117 Engine Sustainment,
December 22, 2014, p. 12. https://media.defense.gov/2014/Dec/22/2001713454/-1/-1/1/DODIG-2015-058.pdf
27
Department of Defense Inspector General, U.S. Air Force May Be Paying Too Much For F117 Engine Sustainment,
December 22, 2014, p. 14. https://media.defense.gov/2014/Dec/22/2001713454/-1/-1/1/DODIG-2015-058.pdf

 Naval Supply Systems Command
Needs to Improve Cost
Effectiveness of Purchases for the
Phalanx Close-In Weapon System
(December 19, 2014)

Air Force Life Cycle Management
Center’s Management of F119
Engine Spare Parts Needs
Improvement (December 19,
2014)
Military Sealift Command
Oversight of Excess Spare-Parts
Inventory and Purchases for
Sealift Program Roll-On/Roll-Off
Ships Needs Improvement
(September 9, 2014)
28

requested that the IG
not release its report
until those negotiations
concluded. The company
also did not comply with
a subpoena issued by
the IG.28
In a sole-source commercial item
”Raytheon could not
contract, the IG found that the Navy
provide [unit price] data
“may be overpaying Raytheon. In
because of deficiencies
addition … [The Navy] cannot
in its accounting system
quantify the work Raytheon
and inability to track
performed for the $69.6 million spent costs at the piece part
on the current performance-based
level.”30
logistics contract.” “Overall, our
price-reasonableness analysis
identified that [the Navy] would have
potentially overpaid approximately
$17.8 million net.”29
The Air Force may have been
Pratt and Whitney could
overcharged for $2.3 million in
not provide prices for
“obsolete spare parts,” on a sole4,433 spare parts in the
source, 10-year contract to provide
Air Force’s central
31
parts for the F119.
repository or 6,186 parts
in its operating base
level inventory.32
Military Sealift Command “did not
“MSC’s failure to review
ensure that Patriot Contract Services PCS’s justification for the
(PCS) had acceptable justifications for inadequate competition
13 spare-parts purchases not
increased the risk that
adequately competed. … MSC
potentially overpaid for parts

Department of Defense Inspector General, U.S. Air Force May Be Paying Too Much For F117 Engine Sustainment,
December 22, 2014, p. 14. https://media.defense.gov/2014/Dec/22/2001713454/-1/-1/1/DODIG-2015-058.pdf
29
Department of Defense Inspector General, Naval Supply Systems Command Needs to Improve Cost Effectiveness
of Purchases for the Phalanx Close-In Weapon System, December 19, 2014, p. i,6.
https://media.defense.gov/2018/Jul/23/2001945902/-1/-1/1/DODIG-2015-053.PDF
30
Department of Defense Inspector General, Naval Supply Systems Command Needs to Improve Cost Effectiveness
of Purchases for the Phalanx Close-In Weapon System, December 19, 2014, p. 11.
https://media.defense.gov/2018/Jul/23/2001945902/-1/-1/1/DODIG-2015-053.PDF
31
Department of Defense Inspector General, Air Force Life Cycle Management Center’s Management of F119
Engine Spare Parts Needs Improvement, December 19, 2014, pp. 2, 15. https://www.muckrock.com/foi/unitedstates-of-america-10/dod-ig-air-force-life-cycle-management-centers-management-of-f119-engine-spare-partsneeds-improvement-15265/#file-52893
32
Department of Defense Inspector General, Air Force Life Cycle Management Center’s Management of F119
Engine Spare Parts Needs Improvement, December 19, 2014, p. 38. https://www.muckrock.com/foi/united-statesof-america-10/dod-ig-air-force-life-cycle-management-centers-management-of-f119-engine-spare-parts-needsimprovement-15265/#file-52893

 Defense Logistics Agency Aviation
Potentially Overpaid Bell
Helicopter for Sole-Source
Commercial Spare Parts (July 3,
2014)

Defense Logistics Agency and
Maritime Paid Too Much for High
Mobility Multipurpose Wheeled
Vehicle Repair Parts (April 4,
2014)

33

procured without adequate
competition and paid about $63,674
more than [the Defense Supply
System] price for 28 of 76 parts
purchased.”33
“DLA potentially overpaid Bell about
$9 million on 33 of 35 sole-source
commercial spare parts reviewed. …
DLA may overpay as much as $2.6
million over the next 12 months on
future orders under this contract.”35
Potential overpayments were the
result of the contracting officer not
sufficiently determining whether the
prices were fair and reasonable.36
Cost data was supplied to the IG only
after a subpoena was issued to Bell, a
power that isn’t available to the
contracting officer.
In a sole-source commercial contract
“contracting officials paid an
additional $26.3 million for escalation
[labor] rates that were not
supported” or request cost data
before purchasing $563.2 million in
parts. AM General credited DoD
$1.62 million for overpayments

MSC paid more than
necessary.”34

“The Director [of the
Defense Logistics
Agency] explained that
Bell has consistently
refused to provide cost
data for commercial
parts; therefore, DLA
does not believe they
have the ability to obtain
cost data.”37

Contracting officers did
not request sales or cost
data to analyze price
reasonableness, instead
relying on other
“primary and secondary”
sources.39

Department of Defense Inspector General, Military Sealift Command Oversight of Excess Spare-Parts Inventory
and Purchases for Sealift Program Roll-On/Roll-Off Ships Needs Improvement, September 9, 2014, p. i.
https://media.defense.gov/2014/Sep/09/2001713398/-1/-1/1/DODIG-2014-106.pdf
34
Department of Defense Inspector General, Military Sealift Command Oversight of Excess Spare-Parts Inventory
and Purchases for Sealift Program Roll-On/Roll-Off Ships Needs Improvement, September 9, 2014, p. 16.
https://media.defense.gov/2014/Sep/09/2001713398/-1/-1/1/DODIG-2014-106.pdf
35
Department of Defense Inspector General, Defense Logistics Agency Aviation Potentially Overpaid Bell Helicopter
for Sole-Source Commercial Spare Parts, July 3, 2014, p. i.
http://www.pogoarchives.org/straus/reports/fouo_dodig_2014_088_dla_aviation_bell_helicopter.pdf
36
Department of Defense Inspector General, Defense Logistics Agency Aviation Potentially Overpaid Bell Helicopter
for Sole-Source Commercial Spare Parts, July 3, 2014, p. 4.
http://www.pogoarchives.org/straus/reports/fouo_dodig_2014_088_dla_aviation_bell_helicopter.pdf
37
Department of Defense Inspector General, Defense Logistics Agency Aviation Potentially Overpaid Bell Helicopter
for Sole-Source Commercial Spare Parts, July 3, 2014, p. 16.
http://www.pogoarchives.org/straus/reports/fouo_dodig_2014_088_dla_aviation_bell_helicopter.pdf
39
Department of Defense Inspector General, Defense Logistics Agency Land and Maritime Paid Too Much for High
Mobility Multipurpose Wheeled Vehicle Repair Parts, April 4, 2014, Summary.
http://s3.amazonaws.com/fcmd/documents/documents/000/003/787/original/MacAndrews_and_Forbes__Humvee_Parts_Audit_DODIG_SUMMARY.pdf?1430853901

 Ontic Engineering and
Manufacturing Overcharged the
Defense Logistics Agency for SoleSource Spare Parts (February 15,
2014)

38

related to $1.5 million in
overpayments for parts.38
“DLA paid approximately $8 million
more than is fair and reasonable for
21 sole-source spare parts [and] will
spend approximately $11 million
more than is fair and reasonable over
the next 5 years if no change is
made.”40

“DLA contracting
officials did not obtain
fair and reasonable
prices for sole-source
spare parts purchased
from Ontic for 21 parts,
valued at $26.2 million,”
instead relying on
“previous DoD purchase
prices without
determining the price
reasonableness of the
historical prices.”41
“Negotiations spanned
14 months and
eventually were
elevated to the DLA
Division Chief and
Ontic’s Director of
Contracts, because Ontic
failed to provide
requested cost and
pricing data in a timely
manner. … DLA
determined the price
was not fair and
reasonable but was the
best attainable price and
that further delays in
awarding the contract
jeopardized the
readiness level of the

Department of Defense Inspector General, Defense Logistics Agency Land and Maritime Paid Too Much for High
Mobility Multipurpose Wheeled Vehicle Repair Parts, April 4, 2014, Summary.
http://s3.amazonaws.com/fcmd/documents/documents/000/003/787/original/MacAndrews_and_Forbes__Humvee_Parts_Audit_DODIG_SUMMARY.pdf?1430853901
40
Department of Defense Inspector General, Ontic Engineering and Manufacturing Overcharged the Defense
Logistics Agency for Sole-Source Spare Parts, February 15, 2014, p. i.
https://media.defense.gov/2016/Apr/20/2001774183/-1/-1/1/DODIG-2014-110.pdf
41
Department of Defense Inspector General, Ontic Engineering and Manufacturing Overcharged the Defense
Logistics Agency for Sole-Source Spare Parts, February 15, 2014, p. 3.
https://media.defense.gov/2016/Apr/20/2001774183/-1/-1/1/DODIG-2014-110.pdf

 Air Force Life Cycle Management
Center Could Not Identify Actual
Cost of F119 Engine Spare Parts
Purchased From Pratt and
Whitney (February 10, 2014)

A version of the report released to
the Dayton Daily News reported the
Air Force could not determine if it
paid Pratt and Whitney fair and
reasonable prices for F-22 Raptor
engine parts as part of a sole-source
cost-plus-fee $1.6 billion sustainment
contract.43

U.S. Army Contracting Command
Did Not Obtain Fair and
Reasonable Prices for
Communications Equipment
(December 5, 2013)

“[Army Contracting Command]
potentially overpaid up to $3.3
million for communications
equipment purchased for the Afghan
National Security Forces,” because
the contracting officer didn’t “obtain
fair and reasonable prices” or “most

42

CH-53 Sea Stallion
helicopter.”42
”The [Air Force] requests
and receives all cost or
pricing data from Pratt
and Whitney required to
complete negotiations.
However, the [Air Force]
contracting officers did
not take full advantage
of the provided cost or
pricing data, because
[they] focused their
negotiations on
quantities of F119
engine spare parts
rather than unit prices.
… The contracting
officers relied on full
engine costs previously
negotiated on a prior
production contract
rather than negotiating
individual unit costs of
F119 engine spare
parts.”44
“The [Contracting
Officer] assigned during
the pre-award process
requested commercial
sales data from Datron
for 298 items but
accepted that Datron
only provided data for

Department of Defense Inspector General, Ontic Engineering and Manufacturing Overcharged the Defense
Logistics Agency for Sole-Source Spare Parts, February 15, 2014, p. 17.
https://media.defense.gov/2016/Apr/20/2001774183/-1/-1/1/DODIG-2014-110.pdf
43
Barrie Barber, “Defense department report questions amount spent on F-22 spare parts,” Dayton Daily News,
October 10, 2014. https://www.daytondailynews.com/news/local-military/defense-department-report-questionsamount-spent-spare-parts/eai6LD0mTSRWGwb6nY48DI/; Department of Defense Inspector General, Air Force Life
Cycle Management Center Could Not Identify Actual Cost of F119 Engine Spare Parts Purchased from Pratt and
Whitney, February 10, 2014, p. 2. https://docs.pogo.org/document/2019/DOD+IG+report_searchable2.pdf
44
Department of Defense Inspector General, Air Force Life Cycle Management Center Could Not Identify Actual
Cost of F119 Engine Spare Parts Purchased from Pratt and Whitney, February 10, 2014, p. 6.
https://docs.pogo.org/document/2019/DOD+IG+report_searchable2.pdf

 favored customer price on 40 of 75
commercial sales items.”45

Improved Guidance Needed to
Obtain Fair and Reasonable Prices
for Sole-Source Spare Parts
Procured By the Defense Logistics
Agency From The Boeing
Company (June 7, 2013)

“DLA Aviation paid approximately
$13.7 million in excess of fair and
reasonable prices” on 1,469 delivery
orders valued at $27.2 million for
sole-source spare parts.48 The IG
stated, “If prices are not corrected,
DLA Aviation will continue to overpay
on future sole-source spare parts
procured from Boeing.49

Pricing and Escalation Issues
Weaken the Effectiveness of the
Army Contract with Sikorsky to
Support the Corpus Christi Army
Depot (September 8, 2011)

“Sikorsky charged the Army $11.8
million or 51.4 percent more … than
fair and reasonable for 28 parts. If
prices are not corrected [Army]
officials will pay excessive profits of
approximately $16.6 million over the

45

23 items.”46 For 40 of 75
that had commercial
customers, the
government did not pay
the lower commercial
price. For one part, this
resulted in an
overpayment of
$614,258.50 for
manpack transceivers.47
DLA did not require its
officers to conduct fair
and reasonable price
analyses, nor require
reviews of pricing for
long-term contracts.
Boeing did not maintain
complete cost and
pricing data “because
DLA Aviation contracting
officers did not conduct
adequate contract
oversight as required by
the FAR.”50
“Pricing problems also
occurred because
Sikorsky officials
proposed, and AMCOM
officials accepted,
questionable cost or

Department of Defense Inspector General, U.S. Army Contracting Command Did Not Obtain Fair and Reasonable
Prices for Communications Equipment, December 5, 2013, p. i.
https://media.defense.gov/2013/Dec/05/2001713324/-1/-1/1/DODIG-2014-020.pdf
46
Department of Defense Inspector General, U.S. Army Contracting Command Did Not Obtain Fair and Reasonable
Prices for Communications Equipment, December 5, 2013, p. 5.
https://media.defense.gov/2013/Dec/05/2001713324/-1/-1/1/DODIG-2014-020.pdf
47
Department of Defense Inspector General, U.S. Army Contracting Command Did Not Obtain Fair and Reasonable
Prices for Communications Equipment, December 5, 2013, p. 8.
https://media.defense.gov/2013/Dec/05/2001713324/-1/-1/1/DODIG-2014-020.pdf
48
Department of Defense Inspector General, Improved Guidance Needed to Obtain Fair and Reasonable Prices for
Sole-Source Spare Parts Procured By the Defense Logistics Agency From The Boeing Company, June 7, 2013, p. i.
https://media.defense.gov/2017/Oct/31/2001835927/-1/-1/1/DODIG-2013-090.PDF
49
Department of Defense Inspector General, Improved Guidance Needed to Obtain Fair and Reasonable Prices for
Sole-Source Spare Parts Procured By the Defense Logistics Agency From The Boeing Company, June 7, 2013, p. 4.
https://media.defense.gov/2017/Oct/31/2001835927/-1/-1/1/DODIG-2013-090.PDF
50
Department of Defense Inspector General, Improved Guidance Needed to Obtain Fair and Reasonable Prices for
Sole-Source Spare Parts Procured By the Defense Logistics Agency From The Boeing Company, June 7, 2013, pp. 3,
4. https://media.defense.gov/2017/Oct/31/2001835927/-1/-1/1/DODIG-2013-090.PDF

 remaining 2 years of the contract.”51
This contract was for
“noncompetitive spare parts.”52
Sikorsky agreed to refund $1 million
for certain overpriced spare parts in
this case.

Excess Inventory and Contract
Pricing Problems Jeopardize the
Army Contract with Boeing to
Support the Corpus Christi Army
Depot (May 3, 2011)

51

pricing data that had no
relationship to the actual
price Sikorsky negotiated
with its subcontractors.”
Additionally, “Sikorsky
officials proposed, and
[Army] officials
accepted, questionable
cost or pricing data that
had no relationship to
the actual price Sikorsky
negotiated with its
subcontractors.” 53
“Boeing charged the Army about $13 “Neither the Army nor
million or 131.5 percent more ($23
Boeing officials
million versus $10 million) than fair
performed adequate
and reasonable prices for the 18
cost or price analyses to
parts. During the audit, Boeing issued establish the
the Army a credit for $324,616 for
reasonableness of the
one of the defectively priced parts.
proposed subcontract
After [the IG] issued the draft report, prices that were used to
Boeing provided additional refunds of support negotiated
about $1.3 million.”54
prices. … Boeing officials
routinely proposed, and
[Army] officials
accepted, egregiously
deficient cost or pricing
data.”55 Boeing
furnished outdated
prices for quantities of
one and “certified cost
or pricing data that were
not complete, accurate,

Department of Defense Inspector General, Pricing and Escalation Issues Weaken the Effectiveness of the Army
Contract with Sikorsky to Support the Corpus Christi Army Depot, September 8, 2011, p. i.
https://media.defense.gov/2011/Sep/08/2001712905/-1/-1/1/11-104redacted.pdf
52
Department of Defense Inspector General, Pricing and Escalation Issues Weaken the Effectiveness of the Army
Contract with Sikorsky to Support the Corpus Christi Army Depot, September 8, 2011, p. 4.
https://media.defense.gov/2011/Sep/08/2001712905/-1/-1/1/11-104redacted.pdf
53
Department of Defense Inspector General, Pricing and Escalation Issues Weaken the Effectiveness of the Army
Contract with Sikorsky to Support the Corpus Christie Army Depot, September 8, 2011, p. 4.
https://media.defense.gov/2011/Sep/08/2001712905/-1/-1/1/11-104redacted.pdf
54
Department of Defense Inspector General, Excess Inventory and Contract Pricing Problems Jeopardize the Army
Contract with Boeing to Support the Corpus Christi Army Depot, May 3, 2011, p. i.
https://assets.documentcloud.org/documents/204808/full-unredacted-dod-office-of-inspector-general.pdf
55
Department of Defense Inspector General, Excess Inventory and Contract Pricing Problems Jeopardize the Army
Contract with Boeing to Support the Corpus Christi Army Depot, May 3, 2011, p. 26.
https://www.documentcloud.org/documents/204808-full-unredacted-dod-office-of-inspector-general

 Lean Six Sigma Project – Defense
Logistics Agency/Honeywell LongTerm Contract Model Using OnePass Pricing for Sole-Source Parts
(February 18, 2011)
Procuring Noncompetitive Spare
Parts Through an Exclusive
Distributor (February 6, 2008)

Procurement of Propeller Blade
Heaters for the C-130 Aircraft
(August 27, 2007)
56

In a sole-source spare parts contract,
repricing based on advice from DLA
Cost/Price, DoD IG, DCAA, and
DECMA led to being able to reduce
prices by about $9.5 million or 9.4
percent for future procurements.57
“DoD contracting officers were
unable to effectively negotiate prices
or obtain best value for
noncompetitive spare parts procured
through Dutch Valley Supply. As a
result, DoD paid about $3.0 million
(75.0 percent) more than the fair and
reasonable prices for 33 parts that
cost about $6.9 million. … If problems
are not addressed, DoD will pay
about $17.8 million more than fair
and reasonable prices for the same
items over the next 6 years.”59

“We calculate [DoD] could have
achieved cost savings of about $2
million for the Air Force and the

and current at the time
of the material
certification cutoff date
(seven parts).”56
The price reduction was
due to access to
Honeywell sales data as
well as other pricing
data.58
“Dutch Valley Supply did
not negotiate prices
proposed by singlesource manufacturers
unless DoD contracting
officers questioned the
reasonableness of the
price.”60 “DoD
contracting officers
primarily relied on
ineffective tools such as
price analysis, cost
analysis of dealer costs,
and dealer competition
to support price
reasonableness
decisions.”61
“Sundstrand refused to
negotiate catalog prices
for commercial items

Department of Defense Inspector General, Excess Inventory and Contract Pricing Problems Jeopardize the Army
Contract with Boeing to Support the Corpus Christi Army Depot, May 3, 2011, p. 26.
https://www.documentcloud.org/documents/204808-full-unredacted-dod-office-of-inspector-general
57
Department of Defense Inspector General, Lean Six Sigma Project – Defense Logistics Agency/Honeywell LongTerm Contract Model Using One-Pass Pricing for Sole-Source Parts, p. i
https://media.defense.gov/2011/Feb/18/2001712196/-1/-1/1/D-2011-042.pdf; Department of Defense Inspector
General, Semiannual Report to the Congress, October 1, 2010-March 31, 2011, p. 97.
https://www.dodig.mil/Portals/48/Documents/SAR/SAR-1-oct-2010-31-mar-2011.pdf?ver=2017-02-02-152055667
58
Department of Defense Inspector General, Lean Six Sigma Project – Defense Logistics Agency/Honeywell LongTerm Contract Model Using One-Pass Pricing for Sole-Source Parts, pp. 8, 15
https://media.defense.gov/2011/Feb/18/2001712196/-1/-1/1/D-2011-042.pdf
59
Department of Defense Inspector General, Procuring Noncompetitive Spare Parts Through an Exclusive
Distributor, February 6, 2008, pp. i-ii. https://media.defense.gov/2008/Feb/06/2001713062/-1/-1/1/08-048.pdf
60
Department of Defense Inspector General, Procuring Noncompetitive Spare Parts Through an Exclusive
Distributor, February 6, 2008, p. 8. https://media.defense.gov/2008/Feb/06/2001713062/-1/-1/1/08-048.pdf
61
Department of Defense Inspector General, Procuring Noncompetitive Spare Parts Through an Exclusive
Distributor, February 6, 2008, p. 4. https://media.defense.gov/2008/Feb/06/2001713062/-1/-1/1/08-048.pdf

 taxpayer, if the blade heater
requirement had been competed
when two approved sources became
available. We also calculate that the
Air Force will pay $1 million more
than necessary.”62

Commercial Contract for
Noncompetitive Spare Parts With
Hamilton Sundstrand Corporation
(September 29, 2006)

62

DoD paid prices “significantly higher
than the prices paid by some
commercial customers,” including
$15.05 for a straight pin sold to
others for $3.88 and $85.02 for an
insulation sleeve that had previously
cost $8.51.64 The $860 million solesource commercial item contract was
for a period of nine years.65 The IG
found questionable commercial item
determinations on “basically all”
spare parts that exempted Hamilton
Sundstrand from submitting cost or
pricing data.66 The IG stated, “This
strategy places the Government at
high risk of paying excessive prices
and profits and precludes good

based on price analysis
of previous cost-based
prices, refused to
provide DLA contracting
officers with
‘uncertified’ cost or
pricing data for
commercial catalog
items, and terminated
Government access to
the Sundstrand cost
history system.”63
The IG said it had
“fundamental
differences” with the Air
Force’s commercial
pricing strategy,
specifically that it was
inappropriate to “enter
into or proceed with a
strategic supplier
initiative with a
contractor that refuses
to provide DoD
contracting officers cost
information when
requested.”68 The result
was that the DoD was
“forced to rely primarily
on price analysis of
previous Government
prices that had been

Department of Defense Inspector General, Procurement of Propeller Blade Heaters for the C-130 Aircraft, August
27, 2007, p. ii. https://media.defense.gov/2007/Aug/27/2001711995/-1/-1/1/07-119.pdf
63
Department of Defense Inspector General, Procurement of Propeller Blade Heaters for the C-130 Aircraft, August
27, 2007, p. 33. https://media.defense.gov/2007/Aug/27/2001711995/-1/-1/1/07-119.pdf
64
Department of Defense Inspector General, Commercial Contract for Noncompetitive Spare Parts With Hamilton
Sundstrand Corporation, September 29, 2006, pp. 37, 41. https://www.documentcloud.org/documents/6140126DoD-IG-Report-Hamilton-Sundstrand.html
65
Department of Defense Inspector General, Commercial Contract for Noncompetitive Spare Parts With Hamilton
Sundstrand Corporation, September 29, 2006, p. i. https://www.documentcloud.org/documents/6140126-DoD-IGReport-Hamilton-Sundstrand.html
66
Department of Defense Inspector General, Commercial Contract for Noncompetitive Spare Parts With Hamilton
Sundstrand Corporation, September 29, 2006, p. i. https://www.documentcloud.org/documents/6140126-DoD-IGReport-Hamilton-Sundstrand.html
68
Department of Defense Inspector General, Commercial Contract for Noncompetitive Spare Parts With Hamilton
Sundstrand Corporation, September 29, 2006, p. iii. https://www.documentcloud.org/documents/6140126-DoDIG-Report-Hamilton-Sundstrand.html

 fiduciary responsibility for DoD
funds.”67
Spare Parts Procurements from
TransDigm, Inc. (February 23,
2006)

67

“This audit was initiated in response
to a Defense Hotline allegation that
AeroControlex was charging the
Defense Logistics Agency excessive
prices and using the commercial item
definition to avoid the Federal
requirement to provide cost or
pricing data.”70 The IG stated that if
the “problems are not addressed, the
Defense Logistics Agency will pay
about $31.8 million more than fair
and reasonable prices for the same
items over the next 6 years.”71

determined not to be
fair and reasonable by
DLA and on previous
audits.”69
“After the commercial
determination was
made, AeroControlex
refused to provide more
detailed cost data to
support the substantial
price increase.”72 “When
contracting officers
requested information
other than cost or
pricing data to support
substantial price
increases, TransDigm
routinely refused to
provide the requested
data.”73

Department of Defense Inspector General, Commercial Contract for Noncompetitive Spare Parts With Hamilton
Sundstrand Corporation, September 29, 2006, pp. ii. https://www.documentcloud.org/documents/6140126-DoDIG-Report-Hamilton-Sundstrand.html
69
Department of Defense Inspector General, Commercial Contract for Noncompetitive Spare Parts With Hamilton
Sundstrand Corporation, September 29, 2006, p. 15. https://www.documentcloud.org/documents/6140126-DoDIG-Report-Hamilton-Sundstrand.html
70
Department of Defense Inspector General, Spare Parts Procurements from TransDigm, Inc., February 23, 2006, p.
i. https://media.defense.gov/2018/Oct/10/2002049899/-1/-1/1/D-2006-055.PDF
71
Department of Defense Inspector General, Spare Parts Procurements from TransDigm, Inc., February 23, 2006, p.
3. https://media.defense.gov/2018/Oct/10/2002049899/-1/-1/1/D-2006-055.PDF
72
Department of Defense Inspector General, Spare Parts Procurements from TransDigm, Inc., February 23, 2006,
pp. 10-11. https://media.defense.gov/2018/Oct/10/2002049899/-1/-1/1/D-2006-055.PDF
73
Department of Defense Inspector General, Spare Parts Procurements from TransDigm, Inc., February 23, 2006, p.
15. https://media.defense.gov/2018/Oct/10/2002049899/-1/-1/1/D-2006-055.PDF