Inspector General Robert P. Storch announced today that the Department of Defense Office of Inspector General (DoD OIG) released the “Audit of Repair Pricing on the F/A-18 Hornet Radar Systems.” This audit was initiated after the DoD Hotline received allegations that the U.S. Navy was overpaying an aerospace and defense company for repairing the F/A-18 Hornet’s Airborne Fire Control Radar Systems. The objective of this audit was to determine whether the Department of the Navy (DON) obtained fair and reasonable pricing for such repairs.
“Federal guidance allows contracting officers to request information necessary to determine a fair and reasonable price,” said IG Storch. “The DoD has a responsibility to be a good steward of taxpayer dollars and should use the resources available to ensure that it consistently gets the best price for what it buys.”
The DoD OIG determined that the DON did not obtain fair and reasonable pricing for repairs of the AN/APG-65 and AN/APG-73, all-weather, multimode airborne radar systems, on the F/A-18 Hornet. While Naval Supply Systems Command Weapon Systems Support (NAVSUP WSS) followed Federal Acquisition Regulation price reasonableness determination requirements, it failed to obtain fair and reasonable prices for repairing 53 percent of parts worth nearly $33 million. As a result, NAVSUP WSS overpaid at least $3.93 million for part repairs.
The DoD OIG found that this occurred because NAVSUP WSS did not identify fluctuations in contracted costs compared to actual touch costs and allowed inconsistent allocation of the support costs across the delivery orders.
The DoD OIG made four recommendations, including that the Commander of NAVSUP WSS:
- Determine whether payments above actual costs were made on delivery orders and implement available options to seek recovery, including voluntary refunds for overpayments of at least $3.93 million; and
- Conduct fair and reasonable price determinations at the part level to identify differences between actual and proposed costs before defining the remaining delivery orders.
The DoD OIG will monitor progress toward the implementation of these recommendations.