The Pentagon says Boeing declined to provide data on the cost of the 11K spare parts

Boeing refused to provide the Pentagon with cost data for nearly 11,000 replacement parts over a one-year period, according to a congressionally mandated report that aims to shed light on opaque pricing data from some military contractors.

According to a previously undisclosed Pentagon estimate presented to the House and Senate defense committees, 97% of such denials by contractors during negotiations between October 2020 and September 2021 accounted for denials of data on 10,659 items under a single contract.

“Boeing’s refusal to provide basic transparency about costs and pricing represents a breach of the company’s duty to the government, taxpayers and our service members,” Sen. Elizabeth Warren and Congressman John Garamendi, the Democratic members of the Senate and House Armed Services committees. wrote Boeing Chief Executive Officer David Calhoun on Wednesday.

Boeing, one of the Pentagon’s prime contractors, said in a statement that “while we have yet to see the Defense Department’s report, we take very seriously our responsibilities to support the warfighter and our obligations to the U.S. government and taxpayers.”

But lawmakers described Boeing as a “particularly bad actor,” saying it gave “absurd and unacceptable” reasons for not releasing the data. Warren and Garamendi demanded that Boeing respond to its policy by June 12.

“All 10,659 objects reported by the Air Force are associated with Boeing Defense Space and Security and Boeing Global Services under a single contracting operation,” the report said. It is about the contract.

The role of TransDigm

Until now, the debate over the refusal to provide cost data has focused on a much smaller company that specializes in providing specialized spare parts required by the military, TransDigm. In the new report, it accounted for the other 3% of such rejections. A long-running dispute over TransDigm’s resistance to releasing the data prompted a request for a report ordered by Congress.

Lawmakers also wrote a similar letter to TransDigm’s chief executive, Kevin Stein, alleging his company failed to provide data on 275 products. “We look forward to meeting with Senator Warren to address her questions,” TransDigm said in a statement.

The Pentagon is under pressure to show it is a good steward of tax dollars as its inflation-adjusted budget request for fiscal year 2024 is the largest in decades. The purchase request is also the largest ever.

The Warren-Garamendi letters and the Pentagon report raise questions about the military’s ability to get the best prices for parts, especially when faced with sole suppliers such as Boeing and TransDigm, which refuse to provide pricing data for a number of reasons. Senior military contracting officers approved the contracts despite data denials because the parts were considered vital.

Lawmakers also wrote to Defense Secretary Lloyd Austin asking for information on what steps his department is taking to prevent “price gouging when companies refuse to provide requested cost or pricing data.” Boeing’s denial of the data makes it impossible for the Pentagon to be sure it “wasn’t ripped off,” they wrote. A Pentagon spokesman did not immediately comment.

The Pentagon report said that officials believe that “the problem of obtaining reasonable information from contractors to support a fair and reasonable determination of prices may be more widespread than indicated in this report.” Acquisition officials “emphasized the importance of notifying military and defense agencies of data denials,” it said.

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