U.S. paid $1 million to ship two 19-cent washers

By Jim Wolf

WASHINGTON (Reuters) - The U.S. Defense Department said on Thursday that a flawed system designed to rush supplies to troops in Iraq and Afghanistan let a small-parts supplier improperly collect $998,798.38 to ship two 19-cent washers.

Loopholes in the automated purchasing system have been fixed and the ill-gotten gains were being returned to the U.S. Treasury, said Army Lt. Col. Brian Maka, a Pentagon spokesman.

The lock-washer incident was the last in a series of abuses by twin sisters running a South Carolina company that bilked the Pentagon out of about $20.5 million in fraudulent shipping costs, federal prosecutors said after obtaining guilty pleas earlier in the day.

The owners of C&D Distributors of Lexington, South Carolina, submitted online bids to the Defense Department to supply hardware components, plumbing fixtures, electronic equipment and other items, according to court papers.

Related shipping claims were processed automatically "to streamline the resupply of items to combat troops in Iraq and Afghanistan," said a statement by Reginald Lloyd, U.S. attorney for the district of South Carolina.

Lloyd said C&D fabricated shipping costs into the hundreds of thousands of dollars, as in the case of the washers, although the value of the items purchased rarely topped $100.

Lock washers place tension against a nut after tightening, to help prevent the nut from loosening.

Maka said the Defense Criminal Investigative Service launched an investigation last September into invoices submitted to the Defense Finance and Accounting Service, or

DFAS.  Continued...