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United Technologies Corporation

Blackhawk Spare Parts Overcharging

Date: 09/08/2011 (Date of First DoD IG Report)

Misconduct Type: Defective Pricing

Enforcement Agency: Defense – General

Contracting Party: Defense - Army

Court Type: N/A

Amount: $1,000,000

Disposition: Investigative Finding

Synopsis: An audit by the Department of Defense’s Inspector General (DoD IG) found that United Technologies’ Sikorsky Aircraft unit overcharged the U.S. Army for UH-60 Blackhawk helicopter spare parts and made excessive profits. DoD IG found that neither Sikorsky nor the Army performed adequate cost or price analyses of proposed subcontractor prices and that the Army purchased parts from Sikorsky when it had sufficient existing inventory to meet requirements at lower cost. Sikorsky also paid excessive prices to subcontractors and did not always provide the most current, complete, and accurate cost data. DoD IG calculated that Sikorsky charged the Army 51.4 percent more than fair and reasonable prices ($11.8 million) and was allowed to make excessive profits of about $931,000 between 2008 and 2010. Sikorsky agreed to provide the Army about $1 million in refunds. DoD IG recommended the Army seek an additional $11.8 million in refunds for unnecessary subcontractor pass-through costs, excessive profits, an unacceptable quantity curve, and instances when Sikorsky negotiated lower supplier prices after negotiating with the Army.