WASHINGTON Three multiyear military contracts with Boeing Co. cost the government at least $3 billion more than originally projected, a federal watchdog agency said Friday.
In a study of three multiyear Defense Department procurement programs, the Government Accountability Office found unit cost overruns ranging from 10 percent to 30 percent due to increases in labor expenses and material costs, among other factors.
None of the programs delivered the anticipated savings that the government had hoped for by awarding funding for more than one year, the GAO said.
The Defense Department spends about $10 billion annually on multiyear procurement. But the GAO said the department does not have a formal mechanism for tracking final costs or comparing them with original projections. The Defense Department also makes few efforts to validate whether savings meet estimates, the agency added.
The GAO conducted the study for the Senate Armed Services Committee.
In one instance, the Air Force paid $16.6 billion $2.3 billion more than originally estimated for 80 of Boeing's C-17A Globemaster aircraft. Another Boeing contract to deliver 232 Apache helicopters to the Army cost $2.1 billion, exceeding the original projection of $1.6 billion. And the Navy paid Boeing $9.2 billion, or $381 million more than the original estimate, for 210 F/A-18E/F Super Hornet attack aircraft.
In a statement, Boeing said it looks forward to working the Defense Department to improve the acquisition process.
"While we have not yet had the opportunity to review the report in any detail, we are committed to multiyear procurements, when appropriate, as a proven way to save both the warfighter and taxpayer money," the Chicago-based company said.
The report also flagged potential risks with two recently approved multiyear programs: an Air Force contract for the F-22A Raptor fighter being built by Lockheed Martin Corp. and a Defense Department contract for the V-22 Osprey, a tilt-rotor aircraft jointly built by Boeing and Textron Inc.'s Bell Helicopter operation.
In its report, the GAO recommends that the Defense Department improve its guidance on multiyear procurement decision criteria, establish a third-party validation process for potential multiyear programs, maintain a central database to monitor major multiyear weapons systems awards and conduct assessments of completed multiyear weapons contracts.