Thursday, July 28, 2011
Norway. All the hallmarks of Al Qaeda
U.S. said unprepared for severe weather
WASHINGTON, July 28 (UPI) -- A top U.S. Senate Democrat said Thursday the federal government is not prepared to handle "catastrophic" weather events.
Sen. Dick Durbin of Illinois, the majority whip, chaired a hearing of the Financial Services and General Government Appropriations Subcommittee to examine the federal government's preparedness for the economic impact of weather events, which he said are growing in frequency and severity.
After hearing testimony from Franklin Nutter, president of the Reinsurance Association of America, Durbin said the federal government should follow the lead of the private sector and begin to focus strategically on the long-term budgetary impacts of severe weather events.
"We are not prepared," Durbin said in remarks provided by his office. "Our weather events are getting worse, catastrophic in fact. The private sector is prepared, but the federal government is ignoring the obvious. We need to do more to protect federal assets and respond to growing demands for disaster assistance on an increasing frequency."
After a record-setting 2010, "the U.S. has already experienced eight natural disasters this year -- the previous record was nine," Durbin said. "Chicago, in my home state of Illinois, has seen some of the worst weather in history."
In February, Chicago was shut down as 2 feet of snow and 20 mph winds hammered the city, killing 36 people and causing $3.9 billion in damages, Durbin said, and last weekend, the city was hit with the largest recorded single-day rainfall in history. "Combined with last night's severe rainstorms, July 2011 is now the wettest month in the 122 y
Read more: http://www.upi.com/Top_News/US/2011/07/28/US-said-unprepared-for-severe-weather/UPI-67791311887242/#ixzz1TSYSubw4
Another heat wave expected to begin Friday and run through at least Wednesday In Northeast
Posted: Thursday, July 28, 2011 10:12 pm
Another heat wave could begin Friday, but temperatures should not be as brutal as last week, the National Weather Service said.
The heat, forecast to peak in the low to mid-90s inland, will cap off July as a record-breaking month, with the highest average temperature since record keeping began.
Forecasts call for similar temperatures through at least Wednesday, with heat indexes in the upper 90s, depending on humidity levels, said Valerie Meola, a National Weather Service meteorologist in Mount Holly. The meteorological definition of a heat wave is at least three consecutive days of 90-degree temperatures, Meola said.
A brief review of climate data for this month by the National Weather Service shows July could set an all-time monthly average temperature by nearly a degree.
The current projection is that July’s average temperature, which includes both daily lows and highs, could be 81 degrees, more than a degree warmer than 2010, which set a record of 79.8 degrees for the Atlantic City reporting station. The station, housed at Atlantic City International Airport in Egg Harbor Township, has collected data at various places in the area since 1874. The normal average temperature for July is 75.6 degrees, the National Weather Service said.
House won't vote tonight on Boehner debt plan
WASHINGTON |
(Reuters) - The House of Representatives will not vote tonight on a plan to raise the debt limit as Republican leaders have struggled to line up support for the measure, Republican Representative Kevin McCarthy said on Thursday.
McCarthy and other Republican leaders had delayed the vote for more than four hours as they sought to persuade a faction of their party to change their minds.
Arguing Libya. Another War, Another Myth
On July 9 I took part in a demonstration in front of the White House, the theme of which was "Stop Bombing Libya". The last time I had taken part in a protest against US bombing of a foreign country, which the White House was selling as "humanitarian intervention", as they are now, was in 1999 during the 78-day bombing of Serbia. At that time I went to a couple of such demonstrations and both times I was virtually the only American there. The rest, maybe two dozen, were almost all Serbs. "Humanitarian intervention" is a great selling device for imperialism, particularly in the American market. Americans are desperate to renew their precious faith that the United States means well, that we are still "the good guys".
This time there were about 100 taking part in the protest. I don't know if any were Libyans, but there was a new element — almost half of the protesters were black, marching with signs saying: "Stop Bombing Africa".
There was another new element — people supporting the bombing of Libya, facing us from their side of Pennsylvania Avenue about 40 feet away. They were made up largely of Libyans, probably living in the area, who had only praise and love for the United States and NATO. Their theme was that Gaddafi was so bad that they would support anything to get rid of him, even daily bombing of their homeland, which now exceeds Serbia's 78 days. I of course crossed the road and got into arguments with some of them. I kept asking: "I hate that man there [pointing to the White House] just as much as you hate Gaddafi. Do you think I should therefore support the bombing of Washington? Destroying the beautiful monuments and buildings of this city, as well as killing people?"
None of the Libyans even tried to answer my question. They only repeated their anti-Gaddafi vitriol. "You don't understand. We have to get rid of Gaddafi. He's very brutal." (See the CNN video of the July 1 mammoth rally in Tripoli for an indication that these Libyans' views are far from universal at home.)
"But you at least get free education and medical care," I pointed out. "That's a lot more than we get here. And Libya has the highest standard of living in the entire region, at least it did before the NATO and US bombing. If Gaddafi is brutal, what do you call all the other leaders of the region, whom Washington has long supported?"
One retorted that there had been free education under the king, whom Gaddafi had overthrown. I was skeptical of this but I didn't know for sure that it was incorrect, so I replied: "So what? Gaddafi at least didn't get rid of the free education like the leaders in England did in recent years."
A police officer suddenly appeared and forced me to return to my side of the road. I'm sure if pressed for an explanation, the officer would justify this as a means of preventing violence from breaking out. But there was never any danger of that at all; another example of the American police-state mentality — order and control come before civil liberties, before anything.
Most Americans overhearing my argument with the Libyans would probably have interjected something like: "Well, no matter how much you hate the president you can still get rid of him with an election. The Libyans can't do that."
And I would have come back with: "Right. I have the freedom to replace George W. Bush with Barack H. Obama. Oh joy. As long as our elections are overwhelmingly determined by money, nothing of any significance will change."
Postscript: Amidst all the sadness and horror surrounding the massacre in Norway, we should not lose sight of the fact that "peaceful little Norway" participated in the bombing of Yugoslavia in 1999; has deployed troops in Iraq; has troops in Afghanistan; and has supplied warplanes for NATO's bombing of Libya. The teenagers of those countries who lost their lives to the US/NATO killing machine wanted to live to adulthood and old age as much as the teenagers in Norway. With all the condemnation of "extremism" we now hear in Norway and around the world we must ask if this behavior of the Norwegian government, as well as that of the United States and NATO, is not "extremist".
The Berlin Wall — Another Cold War Myth
The Western media will soon be revving up their propaganda motors to solemnize the 50th anniversary of the erecting of the Berlin Wall, August 13, 1961. All the Cold War clichés about The Free World vs. Communist Tyranny will be trotted out and the simple tale of how the wall came to be will be repeated: In 1961, the East Berlin communists built a wall to keep their oppressed citizens from escaping to West Berlin and freedom. Why? Because commies don't like people to be free, to learn the "truth". What other reason could there have been?
First of all, before the wall went up thousands of East Germans had been commuting to the West for jobs each day and then returning to the East in the evening; many others went back and forth for shopping or other reasons. So they were clearly not being held in the East against their will. Why then was the wall built? There were two major reasons:
1) The West was bedeviling the East with a vigorous campaign of recruiting East German professionals and skilled workers, who had been educated at the expense of the Communist government. This eventually led to a serious labor and production crisis in the East. As one indication of this, the New York Times reported in 1963: "West Berlin suffered economically from the wall by the loss of about 60,000 skilled workmen who had commuted daily from their homes in East Berlin to their places of work in West Berlin." 1
In 1999, USA Today reported: "When the Berlin Wall crumbled [1989], East Germans imagined a life of freedom where consumer goods were abundant and hardships would fade. Ten years later, a remarkable 51% say they were happier with communism." 2 Earlier polls would likely have shown even more than 51% expressing such a sentiment, for in the ten years many of those who remembered life in East Germany with some fondness had passed away; although even 10 years later, in 2009, the Washington Post could report: "Westerners say they are fed up with the tendency of their eastern counterparts to wax nostalgic about communist times." 3
It was in the post-unification period that a new Russian and eastern Europe proverb was born: "Everything the Communists said about Communism was a lie, but everything they said about capitalism turned out to be the truth." It should also be noted that the division of Germany into two states in 1949 — setting the stage for 40 years of Cold War hostility — was an American decision, not a Soviet one. 4
2) During the 1950s, American coldwarriors in West Germany instituted a crude campaign of sabotage and subversion against East Germany designed to throw that country's economic and administrative machinery out of gear. The CIA and other US intelligence and military services recruited, equipped, trained and financed German activist groups and individuals, of West and East, to carry out actions which ran the spectrum from juvenile delinquency to terrorism; anything to make life difficult for the East German people and weaken their support of the government; anything to make the commies look bad.
It was a remarkable undertaking. The United States and its agents used explosives, arson, short circuiting, and other methods to damage power stations, shipyards, canals, docks, public buildings, gas stations, public transportation, bridges, etc; they derailed freight trains, seriously injuring workers; burned 12 cars of a freight train and destroyed air pressure hoses of others; used acids to damage vital factory machinery; put sand in the turbine of a factory, bringing it to a standstill; set fire to a tile-producing factory; promoted work slow-downs in factories; killed 7,000 cows of a co-operative dairy through poisoning; added soap to powdered milk destined for East German schools; were in possession, when arrested, of a large quantity of the poison cantharidin with which it was planned to produce poisoned cigarettes to kill leading East Germans; set off stink bombs to disrupt political meetings; attempted to disrupt the World Youth Festival in East Berlin by sending out forged invitations, false promises of free bed and board, false notices of cancellations, etc.; carried out attacks on participants with explosives, firebombs, and tire-puncturing equipment; forged and distributed large quantities of food ration cards to cause confusion, shortages and resentment; sent out forged tax notices and other government directives and documents to foster disorganization and inefficiency within industry and unions ... all this and much more. 5
The Woodrow Wilson International Center for Scholars, of Washington, DC, conservative coldwarriors, in one of their Cold War International History Project Working Papers (#58, p.9) states: "The open border in Berlin exposed the GDR [East Germany] to massive espionage and subversion and, as the two documents in the appendices show, its closure gave the Communist state greater security."
Throughout the 1950s, the East Germans and the Soviet Union repeatedly lodged complaints with the Soviets' erstwhile allies in the West and with the United Nations about specific sabotage and espionage activities and called for the closure of the offices in West Germany they claimed were responsible, and for which they provided names and addresses. Their complaints fell on deaf ears. Inevitably, the East Germans began to tighten up entry into the country from the West, leading eventually to the infamous Wall. However, even after the wall was built there was regular, albeit limited, legal emigration from east to west. In 1984, for example, East Germany allowed 40,000 people to leave. In 1985, East German newspapers claimed that more than 20,000 former citizens who had settled in the West wanted to return home after becoming disillusioned with the capitalist system. The West German government said that 14,300 East Germans had gone back over the previous 10 years. 6
Let's also not forget that Eastern Europe became communist because Hitler, with the approval of the West, used it as a highway to reach the Soviet Union to wipe out Bolshevism forever, and that the Russians in World War I and II, lost about 40 million people because the West had used this highway to invade Russia. It should not be surprising that after World War II the Soviet Union was determined to close down the highway.
We came, we saw, we destroyed, we forgot
An updated summary of the charming record of US foreign policy. Since the end of the Second World War, the United States of America has ...
- Attempted to overthrow more than 50 governments, most of which were democratically-elected. 7
- Attempted to suppress a populist or nationalist movement in 20 countries. 8
- Grossly interfered in democratic elections in at least 30 countries. 9
- Dropped bombs on the people of more than 30 countries. 10
- Attempted to assassinate more than 50 foreign leaders. 11
In total: Since 1945, the United States has carried out one or more of the above actions, on one or more occasions, in the following 69 countries (more than one-third of the countries of the world):
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See a world map of US interventions below
The occult world of economics
When you read about economic issues in the news, like the crisis in Greece or the Wall Street/banking mortgage shambles are you sometimes left befuddled by the seeming complexity, which no one appears able to untangle or explain to your satisfaction in simple English? Well, I certainly can't explain it all myself, but I do know that the problem is not necessarily that you and I are economic illiterates. The problem is often that the "experts" discuss these issues as if we're dealing with hard and fast rules or laws, not to be violated, scientifically based, mathematically sound and rational; when, in fact, a great deal of what takes place in the real world of economics and in the arena of "expert" analysis of that world, is based significantly on partisan party politics, ideology, news headlines, speculation, manipulation, psychology (see the utter meaninglessness and absurdity of the daily rise or fall of stock prices), backroom deals of the powerful, and the excessive power given to and reliance upon thoroughly corrupt credit-rating agencies and insurers of various kinds. The agencies like Moody's and Standard and Poor's are protection rackets — pay our exorbitant fees or we give you a bad rating, which investors and governments then bow down to as if it's the result of completely objective and impressive analytical study.
Then there's the exceptions made for powerful countries to get away with things that lesser countries, like Greece, are not allowed to get away with, but all still explained in terms of the unforgiving laws of economics.
And when all other explanations fail to sound plausible, the experts fall back on "the law of supply and demand". But that law was repealed years ago; just try and explain the cost of gasoline based on it, as but one example.
So there's a lot to cover up, many reasons why the financial-world players can't be as open as they should be, as forthright as the public and investors may assume they are.
Consider the US budget deficit, about which we hear a great deal of scare talk. What we don't hear is that the most prosperous period in American history occurred in the decades following the Second World War — from 1946 to 1973. And guess what? We had a budget deficit in the large majority of those years. Clearly such a deficit was not an impediment to growth and increasing prosperity in the United States — a prosperity much more widely shared than it is now. Yet we're often fed the idea of the sanctity of a balanced budget. This and other "crises" are typically overblown for political reasons; the current "crisis" about the debt ceiling for example. Paul Craig Roberts, former Assistant Secretary of the Treasury under Reagan, now an independent columnist, points out that "regardless of whether the debt ceiling is raised the US government is not going to go out of business. ... If Goldman Sachs is too big to fail, certainly, the US government is."
In economic issues that occupy the media greatly, such as the debt ceiling, one of the hidden keys to understanding what's going on is often the conservatives' perennial hunger to privatize Social Security and Medicare. If you understand that, certain things become much clearer. Naomi Klein points out that "the pseudo debate about the debt ceiling ... is naked class war, waged by the ultra rich against everyone else, and it's well past time for Americans to draw the line."
Consider, too, the relative value of international currencies. Logically, reasonably, if the British pound is exchangeable for two dollars, one should be able to purchase in Washington goods and services for two dollars which would cost one pound in London. In real life, this of course is the very infrequent exception to the rule. Instead, at places called "exchanges" in New York and Chicago and London and Zurich and Frankfurt a bunch of guys who don't do anything socially useful get together each day in a large room, and amidst lots of raised voices, busy computers, and numerous pieces of paper, they arrive at a value for the pound, as well as for a barrel of oil, for a pound of porkbellies, and for various other commodities that affect our daily lives. Why should these speculators and parasites have so much influence over the real world, the real economy, and our real lives?
As a general rule of thumb, comrades, as an all-purpose solution to our economic ills, remember this: We'll keep going around in crisis circles forever until the large financial institutions are nationalized or otherwise placed under democratic control. We hear a lot about "austerity". Well, austerity has to, finally, visit the super-rich. There are millions (sic) of millionaires and billionaires in the United States and Europe. As governments go bust, the trillions of dollars of these people must be heavily taxed or confiscated to end the unending suffering of the other 95% of humanity. My god, do I sound like a (choke, gasp) socialist?
Notes
- New York Times, June 27, 1963, p.12 ↩
- USA Today, October 11, 1999, p.1 ↩
- Washington Post, May 12, 2009; see a similar story November 5, 2009 ↩
- Carolyn Eisenberg, Drawing the Line: The American Decision to Divide Germany, 1944-1949 (1996); or see a concise review of this book by Kai Bird in The Nation, December 16, 1996↩
- See William Blum, Killing Hope: US Military and CIA Interventions Since World War II, p.400, note 8, for a list of sources for the details of the sabotage and subversion. ↩
- The Guardian (London), March 7, 1985 ↩
- See chapter 18 of Rogue State: A Guide to the World's Only Superpower – add Palestine, 2006 to the list ↩
William Blum is the author of:
- Killing Hope: US Military and CIA Interventions Since World War 2
- Rogue State: A Guide to the World's Only Superpower
- West-Bloc Dissident: A Cold War Memoir
- Freeing the World to Death: Essays on the American Empire
Ford India Officially Announces Launch of Second Plant in Sanand, Gujarat Following a US$1bn Investment
Ford India officially announced about investing $1bn for building their second engine and vehicle assembly in India. This comes in the wake of the company trying to step up its production to keep up with the increasing demand in the market.
Their assembly plant will be in Gujarat, and will employ 5,000 individuals. This will be the company’s second manufacturing plant in India, following the first plant, which is located in Chennai. We recently announced about the government of Gujarat allocating a 400 acre plot for use to Ford Motors; however there was still no official word from the leading auto company, which was expected to be out today.
Well, the company recently released an official announcement that they have signed a Memorandum of Understanding with the government of Gujarat and will be making an investment of INR 4,000 crores or US$1bn in two facilities that will include body, paint, stamping as well as assembly operations for manufacturing of engines.
The plant will have an annual production capacity of 240,000 units in the initial phase, whereas the engine manufacturing annual capacity in the initial phase will be 270,000 units. The plant is to be built on the 460 acre plot provided by the state of Gujarat. The CEO and president of Ford’s Africa and Asia Pacific division, said Namaste Gujarat! He said that they are delighted on announcing the newest location for the company’s vehicle manufacturing site in Gujarat.
The company has set aggressive growth plans in Africa, Asia Pacific and India, the opening of these 2 new facilities is important for them is realising this strategy for growth in one of the world’s most dynamic regions.
Three explosions hit Libyan capital
Two blasts happened at 10:20 p.m. local time (2020 GMT) on Thursday followed by another explosion several minutes later, AFP said.
Several "civilian sites" had been bombed by NATO on Thursday, Al-Jamahiriya television reported.
According to Libyan state TV, NATO warplanes were flying over the capital on Thursday.
The Libyan government accuses the Western military alliance of bombing civilian areas, causing casualties and damage.
However, NATO said its warplanes target military facilities.
BofA Donates Then Demolishes Houses to Cut Glut of Foreclosures
Bank of America Corp. (BAC), faced with a glut of foreclosed and abandoned houses it can’t sell, has a new tool to get rid of the most decrepit ones: a bulldozer.
The biggest U.S. mortgage servicer will donate 100 foreclosed houses in the Cleveland area and in some cases contribute to their demolition in partnership with a local agency that manages blighted property. The bank has similar plans in Detroit and Chicago, with more cities to come, and Wells Fargo & Co. (WFC), Citigroup Inc. (C), JPMorgan Chase & Co. (JPM) and Fannie Mae are conducting or considering their own programs.
Disposing of repossessed homes is one of the biggest headaches for lenders in the U.S., where 1,679,125 houses, or one in every 77, were in some stage of foreclosure as of June, according to research firm RealtyTrac Inc. of Irvine, California. The prospect of those properties flooding the market has depressed prices and driven off buyers concerned that housing values will keep dropping.
Leaked Audit: Boeing Overcharged Army Up to 177,000 Percent on Helicopter Spare Parts
| A Boeing AH-64 Apache Helicopter and a Boeing CH-47 Chinook Helicopter. Credit: Petty Officer 3rd Class Shawn Hussong, U.S. Navy. |
$644.75 for a small gear smaller than a dime that sells for $12.51: more than a 5,100 percent increase in price. $1,678.61 for another tiny part, also smaller than a dime, that could have been bought within DoD for $7.71: a 21,000 percent increase. $71.01 for a straight, thin metal pin that DoD had on hand, unused by the tens of thousands, for 4 cents: an increase of over 177,000 percent.
Taxpayers were massively overcharged in dozens of transactions between the Army and Boeing for helicopter spare parts, according to a full, unredacted Department of Defense Office of Inspector General (DoD OIG) audit that POGO is making public for the first time. The overcharges range from 33.3 percent to 177,475 percent for mundane parts, resulting in millions of dollars in overspending.
CLICK HERE TO GO TO THE FULL UNREDACTED DoD OIG REPORT
The May 3, 2011, unclassified “For Official Use Only” report is 142 pages. Prior to POGO’s publication of the full report, the only publicly available version was a 3-page “results in brief” on the DoD OIG’s website, first reported by Bloomberg News. The findings in the results in brief, while shocking on their own, pale in comparison to the detail contained within the full report. The DoD OIG scrutinized Army Aviation and Missile Life Cycle Management Command (AMCOM) transactions with Boeing that were in support of the Corpus Christi Army Depot (CCAD) in Texas. The audit focused on 24 “high-dollar” parts. Boeing had won two sole-source contracts (the second was a follow-on contract awarded last year) to provide the Army with logistics support—one of those support functions meant Boeing would help buy and/or make spare parts for the Army—for two weapons systems: the Boeing AH-64 Apache and Boeing CH-47 Chinook helicopters.
Overall, for 18 of 24 parts reviewed, the DoD OIG found that the Army should have only paid $10 million instead of the nearly $23 million it paid to Boeing for these parts—overall, taxpayers were overpaying 131.5 percent above “fair and reasonable” prices. The audit says Boeing needs to refund approximately $13 million Boeing overcharged for the 18 parts. Boeing had, as of the issuance of the audit, refunded approximately $1.3 million after the DoD OIG issued the draft version of its report. Boeing also provided a “credit” to the Army for another part for $324,616. The Army has resisted obtaining refunds worth several million dollars on some of the overpriced spare parts, in opposition to the DoD IG's recommendations. For instance, one of the IG's recommendations was that the Army should request a $6 million refund from Boeing for charging the Army for higher subcontractor prices even though Boeing negotiated lower prices from those subcontractors. In response, the Army said that "there is no justification to request a refund."
In calculating what it says the Army should have paid, the DoD OIG assumed Boeing reasonably should charge a 34 percent surcharge fee for overhead, general and administrative costs, and profit, according to the audit report.
Above and beyond what the DoD OIG viewed as fair and reasonable (including the 34 percent surcharge), Boeing’s average overcharges to the Army for these 18 parts range from 33.3 percent to as much as 5,434 percent, based on the DoD OIG’s analysis.
What is even more shocking is the difference in prices the Army would have paid if it procured many of these parts directly from the Defense Logistics Agency (DLA) and from the Army’s own procurement offices, the audit shows. The largest percentage differences cited in the DoD OIG report—such as the 177,475 percent example (which is not among the 18 parts the report focuses on)—compare DLA unit prices to Boeing unit prices.
CLICK HERE TO JUMP TO THE EXAMPLES OF SPARE PARTS RIPOFFS BELOW
The Overcharges Add Up
The individual transactions of tens of thousands to millions of dollars examined by the DoD OIG may at first appear to be small potatoes against an annual DoD budget of more than $700 billion, including the costs of the wars. But when viewed over the cost of a weapon system’s lifespan, the total cost of spare parts—including simple components such as ball bearings, retainers for nuts and bolts, sleeve bushings (basically just a metal cylinder), and straight metal pins—can be significant. The cost to buy a weapon system out of the factory, such as the AH-64 helicopter, usually is less than the cost to operate and maintain the weapon over its life. Parts on a weapon have to be replaced at varying intervals and, similar to how the human body replaces most cells in the body in less than a decade, a major weapon system with a long-enough life span may eventually be largely rebuilt with new spare parts. Hence the expression that aircraft are nothing but “spare parts flying in close formation.”
The audit report raises significant questions about what the DoD is paying to maintain and operate major weapons. For instance, the estimated “sustainment” price tag for the Lockheed F-35 Joint Strike Fighter is $1 trillion over the next 50 years. The cost of spare parts makes up a portion of that $1 trillion figure. Spare parts overcharges become quite significant when you add up individual overcharges over time, over a number of weapon systems.
As a Government Accountability Office (GAO) report last year stated, “Weapon systems are costly to sustain in part because they often incorporate a technologically complex array of subsystems and components and need expensive spare parts and logistics support to meet required readiness levels.” However, many spare parts need not be so expensive. Better “acquisition of spare parts and components [can] reduce sustainment costs,” according to another GAO report.
Audit May Add to Debate Over Insourcing
The report may also add fuel to the intense debate over the role of contractors and whether more jobs need to be insourced—that is, converted from functions that are currently contracted out to government positions. The DoD OIG found that the Army had issued a sole-source contract to Boeing to do what the DLA is supposed to do for the entire DoD—obtain parts and materials (“DLA reportedly supplies 84 percent of the military’s spare parts”).
The audit report is somewhat vague on why the Army decided to rely on Boeing. The report states that the Army contracted with Boeing “in an effort to streamline its logistic infrastructure.” The intent was “to implement the most successful business practices that would result in reductions in Apache and Chinook weapon systems repair turnaround time, lower required inventory levels, improved readiness, increased depot capacity, and reduction in total cost.” However, the intended goals of the Army’s contracts with Boeing may not have been met. The DoD OIG found that the Army “overstated repair turnaround time improvements” by Boeing. Boeing benefited from these overstated improvements because the Army “overpaid incentives for the repair turnaround time improvements, and Boeing owes the Army a refund of $6.3 million to $10.9 million,” according to the report. Boeing also supplied parts that were “potentially nonconforming” to required specifications, some of which were “not usable.”
Furthermore, in case after case examined by the DoD OIG, the Army was buying parts for much more money from Boeing that DLA already had in its inventory at significantly lower prices. In some cases, Boeing bought parts from DLA (one part of DoD) and resold them at a higher price to the Army (another part of DoD). From 2007 to 2009, Boeing bought $3.1 million in parts from DLA and sold them to the Army for $4.2 million. “[B]ased on the data Boeing provided us, Boeing made a 35 percent profit on the parts that it bought from DLA,” the audit report states.
In sum, “[t]he Army paid significantly higher prices to Boeing than if it would have procured the same parts from DLA,” according to the audit report. Specifically, Army “officials did not effectively use $339.7 million of existing DoD inventory before procuring the same parts from Boeing,” the audit report says, “because DoD had inadequate policies and procedures addressing inventory use.” There was about $243 million to $278 million in DLA’s excess inventory—an inventory taxpayers have already paid for—that is not being used. Yet, the Army is paying Boeing for overpriced parts.
The Army’s sole-source follow-on contract to Boeing to continue supplying the Corpus Christi Army Depot was also awarded despite the fact that the DLA “had sufficient inventory to satisfy annual contract requirements for 1,635 parts on the follow-on contract,” according to the audit report, “and the Boeing contract price for those items was $8.0 million, or 51.2 percent, higher than the DLA price.” These parts are for smaller dollar amount transactions than the 24 “high dollar” spare parts that the DoD OIG focused on, of which 18 were significantly overpriced. There were another 431 parts where it was cheaper to procure from DLA, but DLA had insufficient inventory, and 757 parts in which purchasing from the contractor was cheaper than procuring from DLA.
Another part of the report states that the Army’s contracts with Boeing are part of a wider trend: “The Services also appear to be moving supply operations and material management functions for consumable items from DLA to the private sector.”
DLA needs to be “the first source of supply when cost effective and practical,” the audit report recommends.
Systemic Problem
The DoD OIG audit has received some high-level attention within the DoD. “The policy question we are looking at is: are these isolated instances or is it a systemic problem?” Deputy Secretary of Defense William Lynn said in an interviewwith Bloomberg News. “A systemic problem would suggest we need to take policy steps,” Lynn added.
There are strong reasons to believe the problems are rampant and systemic. “This is not the first time we identified unused DoD inventory,” the DoD OIG audit report says. “During our review of the Air Force Secondary Power Logistics Solution Contract, we identified about $70 million of unused DoD inventory because the Air Force was buying the same parts from a private contractor through a performance-based logistics arrangement.” If changes do “not happen, hundreds of millions of dollars will be wasted as the inventory sits in DLA warehouses, and DoD pays private contractors to provide the same parts.”
Additionally, in 2006, the DoD OIG identified rampant overpricing of spare parts in a DoD sole-source contract with Hamilton Sundstrand, a subsidiary of the United Technologies Corporation. POGO wrote in a letter to Congress, describing some of those DoD OIG findings (many of which had been partially redacted in the publicly available version of their audit report), that there were overcharges of up to 900 percent on the spare parts provided by Sundstrand. POGO also made headlines exposing excessively overpriced spare parts such as the $436 hammer and $640 toilet seat in the 1980s.