BushCo Pentagon sets up system so taxpayers pay 20% more for same stuff.

Pentagon program costing taxpayers millions in inflated prices

By Lauren Markoe and Seth Borenstein

Knight Ridder Newspapers

WASHINGTON - The Pentagon paid $20 apiece for plastic ice cube trays that once cost it 85 cents. It paid a supplier more than $81 apiece for coffeemakers that it bought for years for just $29 from the manufacturer.

That's because instead of getting competitive bids or buying directly from manufacturers like it used to, the Pentagon is using middlemen who set their own prices. It's the equivalent of shopping for weekly groceries at a convenience store.

And it's costing taxpayers 20 percent more than the old system, a Knight Ridder investigation found.

The higher prices are the result of a Defense Department purchasing program called prime vendor, which favors a handful of firms. Run by the Defense Logistics Agency (DLA), the program is based on a military procurement strategy to speed delivery of supplies such as bananas and bolts to troops in the field.

Military bases still have the option of getting competitive bids, but the Pentagon has encouraged them to use the prime vendor system. At the DLA's main purchasing center in Philadelphia, prime vendor sales increased from $2.3 billion in 2002 to $7.4 billion in the fiscal year that ended Sept. 30.

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