Pentagon Paid $998K to Ship Two 19-Cent Washers

Via Bloomberg -

Aug. 16 (Bloomberg) -- A small South Carolina parts supplier collected about $20.5 million over six years from the Pentagon for fraudulent shipping costs, including $998,798 for sending two 19-cent washers to an Army base in Texas, U.S. officials said.

The company also billed and was paid $455,009 to ship three machine screws costing $1.31 each to Marines in Habbaniyah, Iraq, and $293,451 to ship an 89-cent split washer to Patrick Air Force Base in Cape Canaveral, Florida, Pentagon records show.

The owners of C&D Distributors in Lexington, South Carolina -- twin sisters -- exploited a flaw in an automated Defense Department purchasing system: bills for shipping to combat areas or U.S. bases that were labeled ``priority'' were usually paid automatically, said Cynthia Stroot, a Pentagon investigator.

C&D and two of its officials were barred in December from receiving federal contracts. Today, a federal judge in Columbia, South Carolina, accepted the guilty plea of the company and one sister, Charlene Corley, to one count of conspiracy to commit wire fraud and one count of conspiracy to launder money, Assistant U.S. Attorney Kevin McDonald said.

Corley, 46, was fined $750,000. She faces a maximum prison sentence of 20 years on each count and will be sentenced soon, McDonald said in a telephone interview from Columbia. Stroot said her sibling died last year.

Corley didn't immediately return a phone message left on her answering machine at her office in Lexington. Her attorney, Gregory Harris, didn't immediately return a phone call placed to his office in Columbia.

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Ouch. This distributor exploited a logic flaw in the automated DoD purchasing system. While many of us wish that everyone would just be happy and get along and go around kissing flowers and loving each other.....this isn't the real world. Some people are just evil and won't think twice about stepping on other people.

The developers that designed these systems knew this and I can only assume that this risk was discussed at some point. Which makes me wonder why some type of mitigating control wasn't in place to reduce this risk.

Some sort of flag should be raised when the shipping is almost one million dollars for products worth 40 cents.

A little more oversight on taxpayer money might be needed here...