Three independent small-business people charged this week that a Federal Aviation Administration proposal threatens to destroy competition in the manufacture and sale of replacement parts for aircraft and aircraft engines and to bankrupt hundreds of small, independent companies.

"I and many other small businesses like mine, engaged in the aircraft and engine parts replacement industry, are facing ruin if the FAA goes forward with the pending rule," Larry S. Manhan, president of Execuair Corp. of Canoga Park, Calif., told a House Small Business subcommittee hearing Tuesday.

At issue is a proposal that would alter an FAA system in effect since 1956 that allows independent manufacturers to gain FAA approval to manufacture and sell replacement parts for aircraft and aircraft engines. Currently, an estimated 600 small companies hold the "parts manufacturer approvals"--called PMAs--for a total of 20,000 replacement parts used in the overhaul of aircraft.

To obtain a PMA, a company must meet FAA airworthiness specifications and have an adequate quality-control system.

Manhan and other PMA holders told the Congress that they get most of their approvals by demonstrating to the FAA that the designs for parts they will produce are "identical" to the parts produced by the original equipment manufacturer. The FAA checks on it by comparing the drawings.

According to Charles B. Dedmon, vice president of Superior Air Parts, PMA holders generally obtain their drawings through the military, which acquires designs of parts when it buys aviation equipment from the original makers; through vendors, who develop and make parts for the original equipment manufacturers; and by reverse engineering and developmental engineering.

The latest FAA proposal, however, contains what Dedmon charged was "an impossible requirement." It would make the PMA applicant submit, with its own drawing, a revision marking that appears on the original equipment manufacturer's drawings for the part. It's something the PMA "cannot know," said Dedmon.

The FAA proposal also would require the PMA parts to be marked with the original maker's revision marking. Charles Ryan, vice president of Nordham-Lori, a Tulsa firm that holds 23 PMAs and also does overhaul work, charged that the provision would render unusable and unsalable the substantial inventory of parts now held by the nation's airlines and small overhaulers. It would also increase the price of the parts they must buy, he said.

PMA holders contend that the original equipment manufacturers would like to see the FAA go forward with the proposal because it would eliminate competition. PMA holders argue that they charge customers less for the same parts than the original equipment firms charge, even though the parts may have been bought wholesale for the same price from a third source.

The FAA proposal has been opposed by the Justice Department and this week also came under attack from the Office of Advocacy of the Small Business Administration for failing to comply with the Regulatory Flexibility Act.

The FAA is set to testify next week. The agency has said the purpose of the proposal is to "eliminate unnecessary procedural burdens, improve safety, and standardize the PMA process between FAA regions."