Last summer, amid reports that it was planning to charge the Air Force $748 for two modified duckbill pliers, the Boeing Military Airplane Co. announced that the actual charge would be only $90.
But, when the final contract for the pliers and a host of other tools was negotiated last fall, the total value of the deal had not changed--it remained at $557,500.
Boeing said Friday that there was "absolutely nothing underhanded" in the way it handled the contract, nor did it do anything to mislead the Air Force. The Air Force, for its part, said it had succeeded in forcing a major reduction in the contract compared to what was originally proposed.
But the entire affair has prompted some members of Congress to begin questioning anew the Pentagon's commitment to tightening up its procurement process.
"Dealing with these contracts is like squeezing a balloon--you squeeze it in one place and it pops out in another," said Sen. Charles E. Grassley (R-Iowa). "The moral is, you don't listen to the rhetoric coming out of the Pentagon. You look at the bottom line."
The pliers at issue are part of a large contract to provide tools for use in repairing airplane engines. The pliers are the standard duckbill type made by Channellock Inc. of Meadville, Pa., modified with a protective finish and a small notch on the end to make it easier to position a small pin in jet engines.
Allen F. Hobbs, a spokesman for Boeing Military Airplane in Wichita, Kan., said the company never agreed amid last summer's controversy over prices for tools and spare parts to forgo its legitimate administrative expenses.
"What the government asked us to do, and what we did, was to separate out the administrative costs from the hardware costs," Hobbs said.
Each of the prices for the tools in the contract initially reflected a portion of the administrative and overhead costs, Hobbs said. When questions were raised about the high prices, the administrative costs were isolated into a new category that appears in the final contract: $95,307 for "support equipment management."
The pliers were finally listed at $80. Thus, while the list price for each tool stated in the contract declined, the overall size of the contract remained the same.
Late Friday evening, Air Force Maj. Gen. Bernard L. Weiss said that the Air Force should not have bought pliers from Boeing, but he said contracting officers should be credited with negotiating a sharp reduction in the company's original proposal on the tools.
"If you go back to the beginning, you'll find the contractor originally proposed $884,579 for cost and profit," Weiss said.