[Congressional Record (Bound Edition), Volume 160 (2014), Part 4]
[House]
[Pages 4791-4792]
[From the U.S. Government Publishing Office, www.gpo.gov]




                           THE PRICE IS WRONG

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 3, 2013, the gentlewoman from California (Ms. Speier) is 
recognized for 60 minutes as the designee of the minority leader.
  Ms. SPEIER. Mr. Speaker, I thank you for the opportunity to address 
the House tonight on what is called the Defense Logistics Agency, 
something probably not many people have heard about. The DLA is like a 
big hardware store in the Department of Defense.
  About 30 years ago, we heard horrific stories about wasteful spending 
of taxpayers' dollars being spent: $436 on a hammer, $7,600 on coffee 
makers, and $640 for toilet seats. We all thought, Well, it has been 
taken care of. Well, not so fast.
  I am showing you right now what is a plumbing elbow. At the local 
hardware store, this elbow sells for $1.41. But the taxpayers of this 
country spent $80 to a defense contractor that charged us that much 
money for this elbow.
  How about a box of washers? At the local hardware store, we as 
individuals would pay something like $1.22 for this box of washers. 
What did the taxpayers of this country pay a defense contractor for a 
box of washers? How about $196.50?
  So that issue that was around some 30 years ago is still with us 
today. It is time for the House of Representatives and for the Armed 
Services Committee to hold a hearing on why it is that the Defense 
Logistics Agency, our hardware store that is responsible for putting 
together good pricing on spare parts, is being overturned and 
overlooked by defense contractors and persons within the Department of 
Defense who would rather go outside and pay triple, quadruple, 100 
percent more, or 200 percent more.
  We are going to play a game tonight on C-SPAN called ``The Price Is 
Wrong,'' and see what we are talking about here. And if for 1 minute 
you think that we are talking about small potatoes, we are not talking 
about small potatoes. We are talking about a lot of money.
  The Defense Department has so many excess spare parts, they have 
disposed of--thrown away--$15 billion in excess parts and materials in 
just the last 3 years. There is about $96 billion worth of spare parts 
inventory right now in the Defense hardware agency coffers.
  So why would we ever go outside the internal hardware store to buy 
parts?
  Well, some argue that it is faster or it is cheaper to go outside. 
Audits have revealed instances when the military had enough of certain 
parts that they would last 100 years--and they are still going outside 
of the Defense Logistics Agency. That is the equivalent of having spare 
parts that include horseshoes for a cavalry. If we were looking back in 
time today, that is 100 years of spare parts. The likelihood of these 
parts being used completely over 100 years is not so likely.
  You might say, Well, maybe it is difficult for the Defense Department 
to figure out where their spare parts are and how much they are and how 
much they cost. Well, that is not correct. In fact, the Department of 
Defense has the resources and the databases to check the accuracy of 
these prices. The auditor found these overcharges by using the 
Department of Defense's own database. So this is no more than a click 
on a mouse to find out, one, whether the part is in stock and, two, how 
much it costs.
  Well, let's start this game. The first game we are going to play is 
called ``Flip Flop.'' It is a game where the numbers are scrambled.
  I am going to start with the gate assembly in this picture here. This 
is what it looks like. It is a little bit larger than a quarter. Ramp 
gate roller assembly. It is used for the Chinook helicopters.
  You can buy this at a local hardware store for about $3.50, but 
because this is the military and we want the very best quality, the DLA 
sells this part for $7.71.
  So the question is, What did the Army pay for this gate assembly? Did 
they pay $7.71 cents? No, they didn't pay that.
  Did they pay $77.01?
  No, they didn't pay that either.
  Did they pay $771 for this little gate assembly part?
  No.
  For this ramp gate roller assembly they paid $1,678.61.
  That is obscene, and that shouldn't be happening in the Department of 
Defense or anywhere in the Federal Government. The taxpayers should not 
be ripped off in that manner.
  In ``The Price Is Wrong,'' taxpayers always lose because the Defense 
Department consistently pays too much, yet defense contractors 
consistently win.
  So we are going to play the next game, which is ``That's Too Much.'' 
See what happens again when the military thinks that they can get 
something faster and cheaper by not going to the Defense Logistics 
Agency, our in-house hardware store.
  This is a bearing sleeve. Let's see what we paid for this. Did we pay 
$6? That is what it would cost at our local defense hardware store. No, 
we didn't pay $6.
  Was $86 too much to spend for that bearing sleeve?
  No, $86 wasn't too much.
  How about $286? Was that too much to pay?
  No, that wasn't too much to pay either.
  We paid $2,286 for a bearing sleeve that cost $6 at the Defense 
Department's Defense Logistics Agency.
  So that is what we are dealing with here--a rip-off of the taxpayers.
  The truth of the matter is that the Defense Department didn't just 
buy one of these bearing sleeves that we just bought one of here this 
evening. They bought 573 of these bearing sleeves--not for $6, not for 
$86, but for $2,286. And let me do the math for you. That is $1.3 
million in overpayments for just these 573 bearing sleeves.
  Next, we are going to talk about a spur gear for the Chinook 
helicopter. This is what it looks like. It is this tiny little thing 
smaller than a quarter. This is what is used in Chinook helicopters. We 
have lots of them in the DLA. But, again, they didn't want to go to the 
DLA, our hardware store, to actually purchase this.
  They would have paid $12.51 if they had gone to the hardware store 
within the Department. No, they didn't want to do that.
  So was $125 too much to pay for that spur gear?
  No, that wasn't too much.
  In fact, they were willing to pay $644.75 for this little rubberized 
spur gear. It was 34 times the fair and reasonable price.
  So, again, why are we doing something like this? Why are we allowing 
the taxpayer dollars to be flushed down the toilet by not paying what 
is the normal price for these spare parts?
  The last part is a flush door ring. Look at this. This is a pen next 
to it so you can see this is a pretty small part. It is smaller than a 
pen the contracting officer would have used to sign off on the price. 
The DLA sells this part for $8.37.
  Did we pay $83.37 for this product?
  No, we didn't pay $83.37. That wasn't too much.
  What we did pay, though, was $284.46 for this flush ring--34 times 
the fair and reasonable price. For that price you could go to dinner, a 
movie, and rent a hotel room.

[[Page 4792]]

  Which brings me, I guess, to our last game, ``The Showcase Showdown'' 
on ``The Price Is Wrong.'' Much like ``The Price Is Right,'' we have 
this final showcase and we are going to compare two packages and guess 
which one costs more.
  The first showcase is two ramp gate roller assemblies. This was the 
very first thing that we showed you earlier. Here it is. This is the 
item that cost $7.71.
  So the question is, which costs more as a package, two ramp gate 
roller assemblies or a trip to Paris, France? It includes airfare and 4 
nights in a four-star hotel for two adults. Which one do we think costs 
more?
  Well, you have probably figured out that we in fact paid more for the 
ramp gate roller assembly, times two, than you would have paid for a 
trip to Paris France. The Army paid $3,357.22 for these two parts, 
while the trip to Paris is only $2,681.
  So what are we doing here? How many more studies have to be done for 
us to make a serious attempt to clean up the spare parts issue in the 
Department of Defense?
  Very recently--in fact, it just came out in February of this year--
the inspector general for the Department of Defense put out this report 
entitled, ``Air Force Lifecycle Management Center Could Not Identify 
Actual Costs of F-119 Engine Spare Parts Purchased From Pratt and 
Whitney.''
  Can it get any more embarrassing than that? Not only are we spending 
extraordinary sums of money on spare parts and not using the internal 
hardware agency that we have, but in an inspector general's report, the 
Air Force can't even figure out how much it paid for the initial spare 
parts.
  So I would close, Mr. Speaker, by saying that we have a lot to do. 
The Army overpaid Boeing $13 million recently, but the Pentagon only 
recovered $2.6 million.

                              {time}  1630

  It included paying twice the fair and reasonable price for kits, 
overpaid $16,000 for a structural support that should have only cost 
about $1,300.
  So, all right, we overpaid; they overcharged. What happened next? 
Well, after the IG exposed the rip-off that had occurred, what did we 
do? Was that defense contractor kicked out?
  No, I am sorry to say that what happened was the Air Force gave this 
contractor a new contract to oversee the supply chain contract. That is 
like giving the fox a contract to guard the chicken house.
  I don't like playing this game any more than I think the taxpayers 
do; and it is not a game, it is truly a disaster, and it is one that 
we, as Members of the House of Representatives, have to clean up.
  So I will continue to make the public aware of these kinds of 
overpayments until we fix the system. Stay tuned for the next show, 
``The Price Is Wrong.''
  Mr. Speaker, I yield back the balance of my time.

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