Audit: Pentagon paid $76 for 57-cent screw

Military official calls overpayments 'rare'

March 18, 1998
Web posted at: 7:27 p.m. EST (0027 GMT)

WASHINGTON (CNN) -- An audit of Pentagon purchasing shows that the military is still paying vastly inflated prices for some spare parts, including nearly $76 for a screw that should have cost 57 cents.

"We found considerable evidence that the (Department of Defense) has not yet learned how to be an astute buyer in the commercial marketplace," said Eleanor Hill, the Pentagon's inspector general, in testimony Wednesday before a Senate subcommittee.

However, Jacques Gansler, undersecretary of defense for acquisition and technology, called examples of the military paying inflated prices "isolated and rare," given that the Pentagon spends tens of billions of dollars on weapons and components each year.

"In the overwhelming majority of cases, using commercial buying practices and buying commercial items has paid huge dividends in savings, responsiveness and quality," Gansler said.

Among the incidents of overpricing cited by the audit:

A decade ago, the Pentagon implemented purchasing reforms after it was ridiculed for paying $640 for a toilet seat. Gansler said those improved buying practices have saved taxpayers millions of dollars and that mistakes, such as those found in the audit, have been caught quickly.

But Hill told senators that military purchasing officials still often fail to demand price data, use sole-source suppliers when competitors are available and neglect to use the government's substantial clout to drive a hard bargain.

The $76 set screws were used on the Boeing 707

The audit says the Defense Department sometimes pays too much for spare parts because of "poorly conceived and badly coordinated" purchases.

For example, in the case of the $76 screw, the Pentagon says the part was mistakenly ordered under a contract that included charges for delivery of the screws to specific locations on short notice. Also, the part was mistakenly listed as only being available from a single supplier.

Audits of defense purchasing were initiated after calls to a Pentagon waste-fighting hotline in mid-1996.

Military Affairs Correspondent Jamie McIntyre contributed to this report.

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