Pentagon contractors must notify the government if the price of spare parts for sustainment contracts jumps by more than 25%, under bipartisan legislation from Sens.
The bill reported first by Bloomberg Government is intended to prevent price gouging on sole-source contracts obtained without competitive bidding to sustain weapons, aircraft, ships and vehicles long-term. The Pentagon’s Inspector General last year concluded the US Air Force paid more than 80 times the commercial cost for lavatory soap dispensers on the
The inspector general reviewed 46 spare parts for the C-17 and found that the Air Force didn’t pay “fair and reasonable prices” for 12 spare parts, or 26%, valued at $4.3 million. The watchdog couldn’t determine whether the service paid fair prices for 25 spare parts, or 54%, valued at $22.2 million.
“Greedy contractors are threatening our military readiness by sneaking unreasonably high prices into our military’s contracts for basic materials or spare parts,” Warren said in a statement. “We need to step up our efforts to end the Defense Department’s misuse of taxpayer dollars, and our legislation is an important next step,” Grassley said.
Boeing said the report was based “on an inapt comparison of the prices paid for parts that meet military specifications and designs versus basic commercial items that would not be qualified or approved for use on the C-17.”
The senators are expected to announce the “Transparency in Contract Pricing Act of 2025" on Tuesday. Provisions from the legislation are already included in the Senate Armed Services-approved version of the annual defense authorization bill (
Read More: House’s $892.6 Billion Defense Policy Bill Ends Iraq War Powers
The legislation seeks to codify recommendations from the Pentagon’s Inspector General, in particular that contract officers be notified by the contractor when spare parts prices have increased by 25% or more during the performance of a sustainment contract, and to have contract officers investigate the price increase to ensure it’s justified. Under the bill, contractors would be required to report price increases to the Defense Department within 30 days of becoming aware of the rising costs.
A price increase under the bill is defined as 25% above the price specified in the contract bid that the government agreed to or the price the government paid for the item in the previous calendar year. The measure also defines a covered price increase as 50% above the price the government already paid for an item within the past 5 years. The Defense Contract Audit Agency also must report contractors who fail to comply with the price notification requirements.
In the C-17 case, the Air Force paid a 7,943% markup for soap dispensers whose function “is identical, whether used in a residential kitchen or bathroom, commercial restaurant bathrooms, or in an aircraft lavatory,” the IG said in the report. As a result the service overpaid almost $150,000 for the dispensers, the report concluded.
The Air Force also paid a 3,556% markup, more than 36 times the commercially available cost, for pressure transmitters — a mechanical device that measures the pressure of a liquid or gas and converts it into an electrical signal. That resulted in overpaying $142,091, the IG concluded. For retaining bands, or thick rubber bands used in the military, the Air Force paid an 833% markup, or $293,633 in over-payments.
“Defense dollars should be spent on making our military the most lethal fighting force the world has ever seen, not padding the pockets of slick government contractors,” Ernst said in a statement.
Boeing was awarded a 10-year, $11.8 billion sustainment contract for the C-17 in 2011 and in 2021 the Air Force awarded the company a follow-on contract worth $23.8 billion to service the plane through 2031. Boeing purchases the spare parts and the Air Force reimburses the plane-maker.
To contact the reporter on this story:
To contact the editors responsible for this story: