Ice Trays a Hot Potato for Defense Logistics Agency Ice-cube tray: $20.23. Coffee maker: $81. Refrigerator: $32,643. Bad publicity for the Defense Logistics Agency: priceless. DLA’s showcase strategic sourcing program is drawing fire from Congress after news reports alleged that the military paid vastly inflated prices for food service equipment. DLA’s prime vendor program allows military customers to buy commodities directly from pre-selected companies that promise just-in-time delivery. An investigation by Knight Ridder newspapers found that prime vendors charged an average of 20% more for food service equipment than other DLA vendors outside the program. Knight Ridder examined 7,766 purchase orders covering the past ten years. At a Nov. 9 hearing, House Armed Services Committee Chairman Duncan Hunter (R-CA) said, “This is a real slap in the face to the guy making $13,000 a year who is engaged in a firefight in Ramadi. A fairly large amount of incompetence is embedded into the system.” DLA’s director, Vice Adm. Keith Lippert, told the committee that the items cited in news reports were isolated examples and do not reflect systemic problems in the prime vendor program. But he acknowledged that when the agency awarded new contracts in June, it required more frequent reviews of prime vendor pricing. He said the new scrutiny “will significantly reduce, if not completely eliminate, any vulnerability to overpricing.” Lippert insisted the prime vendor program has saved taxpayers hundreds of millions of dollars through lower prices and reduced costs for warehousing and inventory management. He said the Government Accountability Office had recognized the program as a “best practice.” Food service equipment is one of fifteen commodities that the Defense Department buys through prime vendor contracts. Prime vendors sold more than $7 billion worth of products to the military in fiscal 2005, Lippert said. The vendors, who are wholesale distributors, compete for the contracts, but there is no competition on individual purchase orders. Charles Jones of kitchen-equipment distributor Commercial Marketing Corp. in Columbia, SC, said other vendors could provide the same fast delivery and service that is offered by prime vendors. “What value is this prime vendor program adding? Zero,” Jones told Knight Ridder. “It’s a crooked deal.” Knight Ridder’s examination of DLA purchase orders found a prime vendor charged $32,643 for an aircraft refrigerator, almost twice the manufacturer’s suggested price. The $20.23 ice-cube tray was sold for 85 cents by other vendors and the $81 coffee maker was listed elsewhere at $29, according to the report. Adm. Lippert said DLA is reviewing purchases under its old prime vendor contracts. “If any overpayments are confirmed, we will seek and obtain refunds from our prime vendors,” he testified. The committee plans additional hearings later this month.