Lockheed Unit to Cut Cost of Air Force C-5s

A Lockheed subsidiary agreed Thursday to trim an additional $253 million from the cost of the Air Force’s C-5B program, accepting a reduced $1.95-billion contract to build the final 21 giant cargo planes.

The contract will bring to 50 the number of C-5s delivered by Lockheed-Georgia in Marietta, Ga., a wholly owned subsidiary of Lockheed, which has headquarters in Calabasas, Calif.

Thursday’s price reduction brings the total cost of the 50-plane program down to about $6.95 billion from the 1982 contract price of $7.8 billion.

A House committee has charged that the original contract was far too generous. Rep. John Dingell (D-Mich.), chairman of the House Energy and Commerce Committee, said Lockheed was allowed to charge huge amounts in overhead and to set in place a generous profit margin and that the total contract could be overvalued by as much as $1 billion.

The C-5 is the West’s largest aerial cargo carrier, and the Air Force considers the purchase of the 50 planes essential to increasing its airlift capability.

Lockheed spokesman Hugh Burns said the $1.95-billion cost of the final 21 planes had been reached after recent negotiations with the Air Force. “As far as we are concerned, that is the cost of the final 21 planes,” he said.