Lockheed Cited for Selling Military $10 ‘Toilet Pans’ for $317
Congressional investigators charged Friday that the Pentagon, which last year paid the Lockheed Corp. $640 apiece for toilet seat covers for military aircraft, has been overcharged in a new episode by Lockheed on spare parts--this time $317 each for “toilet pans” for its C-5A cargo planes.
In disclosing those costs in letters to Defense Secretary Caspar W. Weinberger, Rep. John D. Dingell (D-Mich.) and the General Accounting Office cited a need for more diligence in the purchase of spare parts and called for systematic revisions in Pentagon procurement practices.
“We are told that this one-pound, thin plastic pot could be purchased at your local hardware store for less than $10,” said Dingell, chairman of the Energy and Commerce oversight subcommittee, which has conducted hearings on the high cost of military spare parts.
Jack Pulwers, a spokesman for Weinberger, said that the defense chief had no comment because he has not received the letters. Lockheed representative Hugh Burns said: “We intend to review these allegations and report back to the proper authorities.”
Price Disparity
The letters from Dingell and the GAO, the auditing arm of Congress, were released jointly by Dingell and the Project on Military Procurement, a Washington-based organization that seeks to publicize military waste and serves as a conduit for government documents on the subject. The letters said that another unexplained price disparity exists between two nearly identical spare parts for C-5A wings that Lockheed sells to the Air Force.
The Air Force has been paying $16,400 for the left-side assembly of a C-5A engine mount and less than $5,000 for the right one, Dingell told Weinberger.
“The GAO found that the assemblies are virtually identical--very much like right and left shoes,” Dingell said.
He said the GAO “recently brought these bizarre prices to the attention of the Air Force” and that the Air Force “is in the process of attempting to obtain some refunds from Lockheed.” But the congressman told Weinberger that “you are a long way from solving the systemic problem.”
After the furor over spare parts pricing broke out two years ago, Pentagon officials sought to institute a corrective practice known as “rate agreements,” under which negotiations were conducted with major defense contractors over the labor and overhead costs that go into the manufacture of such parts and over what profit margin the contractors could reasonably expect.
Reasonable Value
But the GAO charged that rate agreements should not be considered “an automatic determinant of price reasonableness.” Purchasing officers must also consider “a reasonable value for the part” if it is available elsewhere, the agency said.
In citing the toilet pan as an illustration of this, Dingell said that “an Air Force engineer recently reported in writing that the pan was poorly designed and the price was out of control.”
In addition, Dingell said that “the entire latrine system for the C-5A aircraft is being redesigned in a manner that would eliminate the pot . . . .”
“Nevertheless, the Air Force purchased 67 more pots from Lockheed on two separate occasions since the decision was made to move to the (new) latrine,” known as the Mark II toilet, Dingell said.
No Bids on Seat Covers
He added that, to make matters worse, the Air Force has purchased 79 pan assemblies, for up to $272 each, to hold the toilet pots in place until they are replaced by the Mark II latrine. Lockheed spokesmen contended last fall that they had been unfairly pilloried by widespread publicity over the $640 toilet seat covers. They noted that they subsequently agreed to lower the price to $100 for each of the 54 covers, then invited 30 small plastics products firms to bid for the next lot of 10 covers.
But outside companies refused to bid for such a small order, officials said, and Lockheed has continued to supply the toilet parts for $544 each, which the firm calls the “lowest possible price.”
