Contractors Upcharge DOD Millions, Including Fighter Jet Program
Defense contractors have price-gouged the Pentagon for years, charging the Department of Defense much more for parts and equipment than they were worth, according to an investigation from 60 Minutes.
Contractors took advantage of the massive Pentagon budget, over $842 billion for 2023, and the complex and confusing bureaucracy to overcharge the DOD on countless purchases of even routine and simplistic pieces of equipment.
In one case, the Pentagon purchased an oil pressure switch for over $10,000, while NASA paid only $328 for the same switch.
In another bad deal, a former Raytheon executive found that the government was willing to pay $119 million for parts that should have only cost $28 million.
Critical parts for existing equipment also received mark-ups. One contractor, TransDigm, hiked the price of a crucial Apache helicopter valve by $747, or 40%.
One of the reasons for rising costs is a combination of mergers among defense contractors and deregulation in the industry.
Another example of an increased price is in the shoulder fired stinger missile, which cost $25,000 in 1991 and costs $400,000 today — a seven-fold increase accounting for inflation.
One of the most egregious examples of overpriced equipment purchases comes from the F-35 Joint Strike Fighter program, which in 2012 was seven years behind schedule and $90 billion over budget. It could end up costing taxpayers a total of $1.3 trillion after factoring in future support and maintenance costs.
The absurdly large Pentagon budgets are riddled with waste and inefficiencies, and contractors are taking advantage of that. It’s critical to both national defense and the federal budget that the DOD improves its bargaining with contractors to end the practice of price gouging.
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