Air Force Trims Estimate of Lockheed Overcharging

Lockheed reacted with indifference Thursday to the disclosure by Air Force officials that they substantially overestimated the amount of alleged overcharging on Lockheed’s C-5B aircraft contract.

Gen. Lawrence Skantze, chief of the Air Force Systems Command, told a congressional committee Wednesday that the Pentagon had reduced its estimate of overcharging by Lockheed from $489 million to $281 million and may cut that estimate further to $175 million.

The Defense Department charged in August that Lockheed had failed to disclose in 1982 when it negotiated the original contract for the giant transport planes that it intended to seek wage concessions from unions that would reduce its cost of building the C-5B.

“Our position initially was that the allegation had no merit, and we haven’t changed that position,” Lockheed Vice President H. David Crowther said Thursday. “They can reduce it by any amount and our position wouldn’t change.”

Lockheed has demonstrated its resolve to battle the Air Force on the issue. The company initially agreed to build 50 C-5Bs at a total fixed price of $7.8 billion. It had already agreed to one price reduction--cutting the total by $439 million--when the Air Force alleged that it had engaged in “mischarging” on the contract.

“Somebody thought that we should have said a year in advance of union negotiations what the union would agree to,” Crowther said. “We were supposed to know that somehow. We said nonsense.”

Skantze did not elaborate on why the Defense Contract Audit Agency, which made the allegation, had changed its mind.