United Technologies May Be Overpaid on C-130 Parts, Speier Says

  • Lawmaker says U.S. Defense Logistics Agency review fell short
  • Company says it provides parts, service at reasonable prices

A United Technologies Corp. unit that provides parts and services for propellers on aging C-130 Hercules transport planes may be overpaid by as much as $4.4 million because of poor contracting by the Pentagon’s purchasing agency, according to a lawmaker.

Representative Jackie Speier has said she has “grave concern” about an audit by the Pentagon’s inspector general that found “contracting officers performed an insufficient analysis” of United Technologies parts and services pricing, failing to evaluate “the reasonableness of proposed cost elements” for C-130H propeller parts and services.

“As a result, the U.S. government and taxpayers are projected to overpay by as much as $4.4 million,” Speier of California, the top Democrat on the House Armed Services Subcommittee on Oversight and Investigations, wrote Lieutenant General Andrew Busch, director of the Defense Logistics Agency, on Jan. 27.

While the potential overpayment is less than 5 percent of the potential contract total, Speier’s letter highlighted the latest in a series of audits dating to 1998 that criticized the Defense Logistics Agency or contracting officers for the military services for negotiating parts contracts based on insufficient data that potentially risked imposing unreasonable costs for taxpayers.

Michelle McCaskill, a spokeswoman for the defense agency, said in an e-mail that the agency “has received the letter and will respond to the congresswoman directly.”

In a response included in the inspector general’s report, agency acquisition director Matthew Beebe said it “mischaracterizes the extensive efforts DLA went through to obtain cost or pricing data.”

Asked about the audit, United Technologies spokesman Dan Coulom said in an e-mail that the contractor’s aerospace systems unit “provides valuable services and components to the DoD’s Defense Logistics Agency at fair and reasonable prices.” The agency “has ready access to spare parts, without the expense of warehousing large amounts of inventory. This continues to be a mutually beneficial program for our military customers and taxpayers, as well as UTC Aerospace Systems,” he said.

The aerospace systems unit of Hartford, Connecticut-based United Technologies has provided the services since 1996, including inventory management, storage, warehousing and parts forecasting. It’s currently under a three-year base contract with two one-year options that could total $100 million.

The audit also found that when Defense Logistics Agency personnel encountered obstacles when they pressed for data. “We identified 22 instances” from December 2012 to February 2014 in which the United Technologies unit “was unresponsive or evasive” so that it took 17 months to award the contract.

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