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Aviation History
1984
1984 - 0009.PDF
DEFENCE Sparry guilty, GD accused, of spares overpricing WASHINGTON D.C. United States Senator Bill Roth, a Delaware Republican, used a Christmas tree "to demonstrate to US tax payers" how the defence aero space industry is over charging the US Services for spares. Roth gathered TV and Press around his Christmas tree and pointed out the "presents" hung thereon. "A simple 12 cent Allen wrench; price proposed by General Dynamics to the US Air Force is $9,609 each". An antenna motor alignment pin, 3in long and 0 • 53in diameter, "General Dynamics' price for this is $7,417". Although Roth chose a somewhat novel way to high light the increasing scandal over spares, behind the scenes he has been chairman of the Senate Governmental Affairs Committee to review spares and support equipment pric ing practices. The commit tee's efforts have so far led to fines against Sperry, a payback from Pratt & Whit ney, and General Dynamics being investigated for alleged fraud. 976 per cent mark-up The committee findings show that prime contractors mark up subcontractor- supplied equipment by anything up to 976 per cent, although the average GD mark-up on 15 Westinghouse items to service the F-16's radar is 62-8 per cent. The highest mark-up of these is 89 per cent on an RF load, up from $1,716 to $3,249. The lowest is 32 per cent, on a wheeled workbench (with electricity supply). This "maintenance stand" is supplied by Westinghouse for $229,550 and passed on by GD at $302,106. Roth's committee picked out the General Dynamics F-16 weapon system for investigation, although it is clear that GD is not alone in overcharging. The committee found four main weaknesses in Pentagon acquisition of support equipment: 0 Costs for engineering effort, related data, and other loadings are being charged by both the prime contractor and the subcontractor, regardless of which one expends the effort and provides the data. 0 These costs for engineering effort and data are being applied to all quantities procured, not just to the first one of each item procured. 0 The engineering charges are being applied fully, even to items that have already been designed and produced by other companies, and which are widely used throughout the industry. $ Costly and possibly unnec essary sophistication (gold- plating) is being designed into some items that should be fully functional as presently designed. Billion-dollar support In a letter to Deputy Secre tary of Defence Paul Thayer, Roth says: "My investigators reported that the accumu lative costs of the acquisition of support equipment for the F-16 aircraft system alone are in the neighbourhood of $100 million. If this is relatively typical of the proportion of programme funds spent on support equipment, and I suspect it is, total Depart ment of Defence (DoD) spending on support equip ment for all of its major weapon systems probably adds up to several billion dollars. "In my view, the signifi cance of the acquisition weak nesses I have identified and the sheer magnitude of spend ing for support equipment are compelling reasons for the DoD to expand the scope of its action in the area of spare parts procurement to include support equipment purchase practices. Accordingly, I again urge you to do so and would appreciate hearing from you on this matter in the near future." Possible fraud Thayer then directed that General Dynamics be investigated by the US Air Force for "possible fraudulent activities" centred on a 0 • 187in-diameter spotface metal cutter. General Dynam ics price to the US Air Force is $1,158 after buying the tool for $240. The committee tried to buy one of these cutters and was quoted $5 each by ATI Industries in Escondido, California. GD's mark-up on this item was 474 per cent. Other GD mark-ups for simi lar cutters in the series were 976 per cent. General Dynamics denies the fraud allegations, saying the case "has been blown out of all proportion" and "there are indications that the speciality house may have increased the price signifi cantly over the price charged by the manufacturer without the knowledge of General Dynamics". While this could explain the jump from $5 to $240, it does not explain GD's price leap of 474 per cent. But GD is co-operating on the Government investigation "to determine whether any of its employees were aware that the price was inflated, or prof ited from the transaction". Shock waves Shock waves from Roth's crusade against waste are reverberating throughout the US defence industry. Sperry recently pleaded guilty to three felony counts of inflating bills for work on Minuteman missiles in 1981 and 1982. The company has agreed to pay back $850,000, having overcharged the USAF by $325,000. The payback is made up of $650,000 in double damages, $168,000 in interest, and a $30,000 fine. Pratt & Whitney has agreed to refund $432,000 after Roth's committee investigated the company. Hughes Aircraft is developing this manportable anti-tank missile, shown in mockup form. The proposed weapon would use an infrared seeker and tracker enabling fire-and-forget operation FLIGHT International, 7 January 1984
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