Kosten-Preis-Analysengruppe

“Cost/price analysis group,” what retired inspector-general pricing & logistics director Harry Kleinknecht said the U.S. Army doesn’t have, “much less an experienced one.”

A recent inspector general report’s criticized that the Boeing company, the Pentagon’s number two supplier after Lockheed, tried to overcharge the military billions of dollars, discovered in four audits over the past five years. Boeing apparently misinterpreted an inflation formula ~$2 billion in its own favor, for example. The audits caught them e.g. invoicing for new helicopter parts but installing used ones, a situation so old it sounds like how Harry Truman said he rose to F.D.R.’s attention as a congressman during World War II: by driving a congressional committee investigating lethal waste, fraud and abuse committed by military contractors (and not by being a machine politician).

Retired I.G. Boeing auditor Harry Kleinknecht also criticized that the military’s tactics and force preparedness were insufficient “in complex negotiations” with its contractors and that it did not properly inspect, evaluate and respond to the quality of results delivered, or not delivered. When the military failed to know how many items they needed of a part while ordering it, they would let Boeing oversell them, millions of dollars. When they failed to know a part’s market price or what Boeing’s manufacturing costs were for it, they would let Boeing overcharge them, millions of dollars (~$2000 each for a ~$12 part, ~$600 each for a ~$10 part). Contracting officials lacked the engineering? accounting? criminal justice? experience to discern what some of the problems that needed fixing were, Harry Kleinknecht indicated. Bloomberg.com said the inspector general’s report deemed the military’s contract management “lax.” A spokesperson for the inspector general’s office mentioned that the wording of the military procurement contracts could have but did not prevent some of the more expensive and possibly dangerous suppliers’ misunderstandings in the suppliers’ favor, a situation that can hopefully be improved by leveraging the experience accumulated in this area for >100 years.

Thanks to Harry Shearer for mentioning this Bloomberg report on his weekly news podcast, le Show.

(COST en   PRIZE   on ah LEEZ en grue peh.)

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