WASHINGTON, Oct 29 (Reuters) - Boeing ( BA ) overcharged

the U.S. Air Force for spare parts for C-17 transport planes,

including marking up the price on soap dispensers by 7,943%,

according to a report by a Pentagon watchdog.

The Department of Defense Office of Inspector General said

on Tuesday the Air Force overpaid nearly $1 million for a dozen

spare parts, including $149,072 for an undisclosed number of

lavatory soap dispensers from the U.S. planemaker and defense

contractor.

"The Air Force needs to establish and implement more

effective internal controls to help prevent overpaying for spare

parts for the remainder of this contract, which continues

through 2031," said Inspector General Robert Storch.

"Significant overpayments for spare parts may reduce the number

of spare parts that Boeing ( BA ) can purchase on the contract,

potentially reducing C-17 readiness worldwide."

Boeing ( BA ) said on Tuesday it was reviewing the report, adding

that it "appears to be based on an inapt comparison of the

prices paid for parts that meet military specifications and

designs versus basic commercial items that would not be

qualified or approved for use on the C-17."

Boeing ( BA ) said it plans to provide a detailed written response

to the report in the coming days and said the spare parts were

substantially modified to meet military specifications.

The Pentagon's budget is huge, breaking $900 billion last

year, making overcharges by defense contractors a regular

headache for internal watchdogs, but one that is difficult to

detect.

The Inspector General also noted it could not determine if

the Air Force paid a fair price on $22 million of spare parts

because the service did not keep a database of historical

prices, obtain supplier quotes or identify commercially similar

parts.