Air Force Terminates Contract With Rohr
The Air Force is demanding that Rohr Inc. refund $27 million that it paid the Chula Vista aerospace manufacturer for jet aircraft parts that it says Rohr failed to deliver. The Air Force also informed Rohr that it is terminating the parts contract.
The parts at issue are replacement metal pylons used to fasten engines to the wings of the C-5 Galaxy, the Air Force’s largest cargo plane. According to the Air Force, Rohr failed to deliver 135 of the 206 pylons that it ordered under terms of a contract valued at $110 million.
Rohr had previously disclosed that it was involved in a dispute with the Air Force over the pylons, maintaining that the government had changed specifications for the contract to such an extent that Rohr could not produce them profitably. Rohr said Tuesday that the Air Force action was “without merit.”
On May 1, Rohr announced it had filed a breach of contract complaint against the Air Force with the knowledge that the Air Force would soon be seeking termination of the pylon contract. But Rohr did not then publicize the government’s demand for a $27-million refund.
The parts were to have been delivered by Rohr to the Air Force’s San Antonio Air Logistics Center, where C-5s and B-52 bombers are taken for major overhauls.
Rohr has been making the parts for some time. It sold 200 pylons originally to Lockheed, the C-5 Galaxy’s original manufacturer. Rohr’s contract with Air Force covered replacement parts.
Cynthia Bauer, a spokeswoman with the San Antonio Air Logistics Center, acknowledged that the Air Force changed specifications for the pylons after the contract was initiated but said design modifications are not unusual in defense contracts.
The actions cap a long-simmering dispute between the Air Force and Rohr, dating from 1988 when Rohr first objected to inspection procedures at Rohr’s Riverside plant where the pylon components are manufactured. Assembly of the finished pylons is done a Rohr’s Foley, Ala., plant.
Rohr spokesman John Walsh said the company stopped delivering the parts in October. As a result, the company laid off about 70 workers at it the Foley plant and a “handful” of workers in Riverside. None of Chula Vista’s workers were affected.
Rohr has one year to appeal the Air Force’s refund request, an Air Force spokeswoman Cynthia Bauer said Tuesday. Rohr’s Walsh said the company as yet has set aside no reserves to account for a possible refund. Rohr shares lost 12.5 cents to close at $15 in New York Stock Exchange trading Tuesday.
