Army to Resume Paying Bell Helicopters
Bell Helicopter Textron Inc. has agreed to make improvements to its internal accounting system and, as a result, the Army is partially lifting a freeze on monthly contract payments, Army officials announced Thursday.
Because of the company’s willingness to establish new internal controls on contract claims, it will be eligible to receive full monthly progress payments on any contracts awarded after Aug. 8, the Army said.
A 50% reduction in payments imposed last month on existing contracts, however, will remain in effect until “Bell satisfactorily corrects accounting problems for these contracts as well,” the Army statement added.
Bell Helicopter Textron, based in Fort Worth, is a wholly owned subsidiary of Textron Inc., a huge diversified conglomerate based in Providence, R.I. In fiscal 1984, it ranked as the nation’s 28th-largest defense contractor.
On July 12, the Army formally disclosed the existence of a federal criminal investigation of Bell and announced that it was launching its own probe as well.
Army Secretary John O. Marsh ordered an immediate 50% cut in progress payments, which are funds paid out each month as a defense contractor performs work on a weapons system. That decision slashed Bell’s monthly payments from about $13 million to $6.5 million, a reduction that will remain in effect for the time being under Thursday’s decision.
Bell Helicopter Textron currently holds contracts from the Army worth a total $2.7 billion. They include such major programs as the AH-1 Cobra attack helicopter.
While the decision did not affect the reduction in monthly payments on existing contracts, lifting of the ban on future payments comes at a time when Bell is gearing up for a major Army helicopter improvement program.
The company has been selected as the prime contractor on a program to upgrade more than 570 OH-58 observation helicopters at a total projected cost of $2.4 billion.
Carl Harris, a spokesman for Bell, said the company would have no comment on the Army’s announcement.
