Pentagon paid $14.4 million for parts worth $4.4 million: report

If you’re the manufacturer of helicopter parts, you may want to pitch your products to the Defense Department. That’s because you’ll end up pulling in some significant money — and significantly more money than those parts are worth, according to a report from the Office of the Inspector General.

One report shows that in 2012, the Pentagon paid $13.4 million to Bell Helicopter, but the government watchdog says those parts should only have cost $4.4 million. That’s quite a markup.

“The U.S. government is receiving fair and reasonable price for commercial items acquired by our company,” Bell Helicopter spokesman Robert Hastings told Bloomberg.

But the watchdog disagrees.

From the report:

“The contracting officer did not sufficiently determine whether prices were fair and reasonable for sole-source commercial parts negotiated on contract SPE4AX-12-D-9005. This occurred because the contracting officer did not perform an adequate analysis when procuring sole-source commercial parts. Specifically, the contracting officer used the previous DoD purchase price without performing historical price analysis and accepted Bell’s market-based pricing strategy in a noncompetitive environment without performing a sufficient sales analysis.“

“If it’s an isolated case, that’s one thing,” Under Secretary Frank Kendall told Bloomberg. “If it’s systemic, that’s a much bigger deal.”

Here’s a closer look at some of the specific parts, with bevel gears being the undisputed king of inflated price:

h/t: Bloomberg