DOD IG Targest Spare Parts | POLITICO

By Kate Brannen

The Defense Department inspector general has no problem finding examples of money wasted on spare parts.

First, there’s the $5.9 million supply of guide assemblies for the UH-60 Blackhawk helicopter, enough to last for 38 years — far more than the Army could ever use. There’s also the warehouse full of obsolete commander’s seats for the Army’s Stryker vehicle — which soldiers will never install.

And this warehouse isn’t unique. According to a senior defense official, there are many warehouses full of spare parts and equipment that the military may never use.

“We don’t have any problem finding parts to go after,” the senior DoD official said, speaking at an on-background lunch with reporters on Thursday.

How has the problem gotten so bad? Over the past decade, when money was easy to come by, few in the Defense Department took notice of the waste. The military services continued to buy, and often pay too much, for parts that were already in DoD’s inventory — either owned by another service, or more frequently in warehouses maintained by the department-wide Defense Logistics Agency.

Now, the IG’s audit department is making a point of identifying the worst offenders and bringing them to light.

In 2011, it released a report about a roller wheel part — a round piece of plastic that can be held in the hand — used on a ramp to load pallets of equipment on and off the CH-47 helicopter. DLA bought the part from Boeing for $7.71 and had them sitting in its inventory. Rather than go to DLA for the part, the Army bought them separately — for $1,678 apiece.
“The contractor is in business to maximize shareholder profit. If they’re not watched carefully, this is what will happen,” the senior defense official said.

After the overcharges were made public, Boeing voluntarily refunded the Army about $1 million.

At the same time, services are also buying far more spares than could ever be needed, the official said, citing the example of the Blackhawk helicopter equipment.

Instead, services should only buy three to five years out — a message the IG’s office is trying to convey to Congress.
“In this age of shrinking budgets, the department needs to focus on this,” the official said. “No one has put parts under a microscope for years.”

While finding examples of Pentagon waste and excess is like shooting fish in a barrel, it’s more difficult to correct the problem, the senior official said.

“When a corporate culture develops over time, it takes a while to change that culture.”

To solve the problem, the services have to communicate with each other better, the official said.

“They should also be drawing down on DLA inventory before ordering on their own and they’re not doing it,” the official said.

In the past, the services have complained that DLA is too slow in getting them what they need and that it was easier and quicker to just buy what they needed on their own. It’s a big “if” whether that will change.

Plus, once a supply line gets started, it is hard to shut it off, the official said, estimating that today there is $500 million to $1 billion worth of equipment on order that DoD does not need. This is in addition to what’s sitting unused in military warehouses.

Finally, contracts also have to be written differently, the DoD official said. “What Boeing did was outrageous, but it was legal.”

The official was careful to note that the problem extends way beyond Boeing to all of the big contractors.

But things are changing.

“I do see DoD becoming more aggressive,” at recuperating funds, he said. “People are starting to become more conscientious. There is a greater desire to be prudent with taxpayer money.”
And the audit department within the IG office will continue to make it a focus of their work. The Pentagon’s IG office has 600 auditors located in 13 locations around the world. Last year, the office generated 106 reports and identified almost $3 billion in money that could be put to better use — that means each auditor represents a $4.8 million return on investment, the senior official said.

Even though this fiscal year isn’t over, the audit office is set to surpass that number by billions of dollars.

According to the senior DoD official, it has already identified $23.4 billion in money that could be better spent. A big chunk of that comes from one audit report on the procurement of the Marine Corps’ CH-53K helicopter.

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