Firm to Give Navy Full Credit for Ashtray, Other Parts
Grumman Aerospace Corp. said Sunday that it will give the Navy full credit for a $659 ashtray and two other aircraft parts whose prices were questioned, but insisted its charges “accurately reflect” costs under government policy.
“We’re very embarrassed by recent news media stories on these spare parts,” Grumman Chairman John C. Bierwirth said in a written statement.
“In order to avoid further controversy on this issue, Grumman is offering to provide a full credit on the three items in question.”
The company, which is based in Bethpage, N.Y., last Wednesday agreed to reduce the price for the ashtrays, purchased by Miramar Naval Air Station in San Diego, from $659 to $50 each and to refund the difference for seven pieces bought. But Sunday’s statement was the first indication that the company would offer full credit.
Grumman also said that it was justified in charging $404 for socket wrenches and $2,710 for landing-gear ground locks.
Grumman said Sunday that, after checking into the purchases, it found “that the prices paid accurately reflect the costs incurred using government-approved pricing procedures.” It said that the items were bought in small amounts over 15 years, causing the prices to be high.
“However,” Bierwirth said, “Grumman management should have recognized that the intrinsic value of the three items appear far less than the selling price and should not have agreed to accept the orders and provide the parts.”
Grumman officials have said that the spring-loaded ashtrays, for use on E-2C surveillance planes, took 13 hours to make and required 11 parts.
The top Navy officer at Miramar, Rear Adm. Thomas Cassidy Jr., and two subordinates were relieved of duty over the purchasing policies.