GAO says Boeing overruns totaled billions

WASHINGTON -- Three multiyear military contracts with The Boeing Co. cost the government at least $3 billion more than 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 attributable to increases in labor expenses and material costs, among other factors.

The Defense Department spends about $10 billion annually on multiyear procurement. But the GAO said the department lacks a 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.

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 with 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 war fighter and taxpayer money," the Chicago-based company said.

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.