U.S Army Overcharged on Afghan Radio Parts, Audit Finds

The biggest supplier of combat radios for Afghan security forces overcharged the U.S. Army for parts such as transceivers and battery chargers because the service didn’t challenge the pricing, according to the Pentagon’s inspector general.

Personnel with the Army Contracting Command didn’t “perform sufficient analysis” to ensure “fair and reasonable prices” for equipment bought from closely held Datron World Communications Inc., assistant inspector general Jacqueline Wicecarver said in an audit marked “For Official Use Only.”

This is the 10th time since 2008 that the Pentagon inspector general has criticized negotiations over “fair and reasonable prices” for military parts and equipment, according to the report. Three previous audits involved pricing by Boeing Co. (BA) and two others concerned the Sikorsky Aircraft unit of United Technologies Corp.

Based on a sample of 127 items purchased over the past several years from Datron, the command “potentially overpaid up to $3.3 million” for the communications equipment, according to the audit dated Dec. 5. It recommended that the Army seek a refund from Datron and use the money to buy additional equipment.

Orion Linekin, a spokesman for Vista, California-based Datron, said in an e-mail that the company had no comment on the report.

Wasteful spending for Afghan forces has been documented separately by the special inspector general for Afghanistan Reconstruction. That spending watchdog, John Sopko, said last week that he is investigating why 16 refurbished turboprop transport planes that cost the U.S. at least $486 million were never delivered to the Afghan Air Force and are sitting at Kabul International Airport waiting to be destroyed.

‘Appropriate Steps’

Asked about pricing for the Datron radio parts, Army Contracting Command spokesman Ed Worley said in an e-mailed statement that the service is still investigating the findings and can’t comment at this time.

“In the event that a determination is made that the Army was overcharged by Datron, the Army will take the appropriate steps to remedy the situation,” Worley said.

The Datron purchases were ordered under a six-year contract that runs through March. The company has delivered about 55,700 radios to Afghanistan for use by the Afghan National Army.

Army personnel failed to challenge the price of a PRC-1060-MK radio “module kit” that soared almost eightfold to $2,111.36 in 2012 from $279.65 in 2010, according to the audit.

Need to Verify

Nor did personnel perform an independent analysis to identify the reason for an increase in the price for “radio spare parts” kits that grew to $1,215 each in 2010 from $356 a year earlier.

The largest potential overcharge was $614,259 for the purchase of 16,829 PRC1077 VHF radio transceivers. The Army overpaid $36.50 for each transceiver, or about 1.3 percent, the audit found.

The command “will continue to overpay on future Datron procurements if contracting officers do not perform sufficient analysis to verify prices are fair and reasonable and consistent with prices authorized under the Most Favored Customer clause” that’s supposed ensure that the Pentagon gets the best deal offered, according to the report.

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net

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