• Large Defense Contractors Drastically Inflating Prices While Pentagon Pays

    June 23, 2023
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    In the same week that the Pentagon announced a $6 billion accounting error, an investigation by Responsible Statecraft exposed some painfully glaring examples of large Department of Defense (DoD) contractors raising their prices astronomically and more concerning, the Pentagon paying the outrageously inflated prices.

    Take for example a trashcan that Boeing used to charge the DoD $300 for to have onboard E-3 Sentry Airborne Warning and Control System (AWACS) aircraft, which are built on the chassis of a Boeing 707 airliner. When the 707 was decommissioned from civilian airlines the trash receptacle lost its "commercial" item status and Boeing hiked up the price.

    According to Connor Echols with Responsible Statecraft, "In 2020, the Pentagon paid Boeing over $200,000 for four of the trash cans, translating to roughly $51,606 per unit." In 2021, the Pentagon purchased another 11 trash cans for "only" $36, 640 per unit. In total, the purchases for the 2 years represented an alarming $600,000 increase over previous prices. And Boeing isn't the only contractor absurdly overcharging American taxpayers.

    New York-based Jamaica Bearings Company in 2022 sold the Pentagon 13 radio filters that had previously been priced at $350 per unit for $49,000 per filter. Lockheed Martin also increased the cost of an electrical conduit for the P-3 Orion anti-submarine and maritime surveillance plane by as much as 1400 percent. From 2008-2015 that price hike brought in an additional $133,000 for Lockheed.

    In response to a 60 Minutes investigation into defense contractor price-gouging that was conducted in May, 5 senators sent a letter to Secretary of Defense Lloyd Austin requesting that the Pentagon conduct its own investigation into the overly inflated prices.

    "These companies have abused the trust government has placed in them, exploiting their position as sole suppliers for certain items to increase prices far above inflation or any reasonable profit margin," Senators Mike Braun (R-IN), Charles Grassley (R-IA), Bernie Sanders (I-VT), Elizabeth Warren (D-MA), and Ron Wyden (D-OR) wrote in the letter.

    According to Echols' reports consolidation of 'prime' DoD contractors capable of competing for large contracts has dwindled from more than 50 in the 1990s to 5 and is at least partially responsible for the increase in price-gouging.

    The most recent National Defense Authorization Act will allow the federal government to spend more than $850 billion on "defense" in the 2023 fiscal year, approximately half of which will go to defense contractors.

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    With concerns mounting over dwindling U.S. military stockpiles due to Washington's ongoing support of Ukraine in its war against Russia, that figure is likely to increase in the future - hopefully, however, not along with defense contractors' prices.

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    Author

    Jen Snow

    Jen Snow is a former paralegal turned freelance writer who has a passion for foreign affairs. When not writing, she can be found curled up with her dog and a good book or outside playing in the Florida sun.
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