Fairchild Republic Co. said yesterday that the Air Force had refused for more than two months to accept the company's shipments on several aircraft projects because they did not meet government standards.
But executives of the troubled defense contractor said the Air Force's decision earlier this month to start accepting shipments again was a sign of the government's confidence in Fairchild Republic's efforts to "overhaul" its operations.
The Air Force said Thursday it had halved progress payments to Fairchild Republic on two weapons programs, citing "numerous management and production deficiencies" identified during a June review of the company's Long Island, N.Y., plant.
After the review "rated all areas unsatisfactory," the Air Force refused to accept Fairchild Republic parts for programs including the space shuttle, the Lockheed C5B transport, the McDonnell Douglas F4 Phantom fighter, the Grumman F14, the A10 Thunderbolt, and Fairchild's T46A jet trainer plane, said John W. Sandford, president of Fairchild Republic, a subsidiary of Fairchild Industries Corp. of Chantilly, Va.
The Air Force decided in mid-August to accept the parts held up during the 2 1/2-month period, a spokesman said. The government delayed payment for those parts until they were accepted, but Fairchild said it could provide no estimate of value of the delayed payments.
Sandford said the decision to accept the parts is "a measure of the fact that the Air Force approves of the corrective actions we have taken."
But the government said Thursday it had reduced to $4 million a month its payments for production of the T46 and spare parts for the A10. The Air Force said it will decide when and how much of the payments to restore depending on improvements of Fairchild Republic's operations. The decision delays but does not reduce the full amount Fairchild expects to receive for the two contracts.
The T46 program has been subject to delays, generating speculation that the government might cancel it, or remove it from Fairchild's exclusive management and open it up to competition from other contractors.
"We were not giving the government what it was asking for," Sandford said, explaining the problems that led to the Air Force's review and subsequent actions. "We had become lax . . . we had fallen down by our own standards."
Sandford became president of Fairchild Republic earlier this month, filling a job that had been vacant since February when Robert J. Sanator, the president since late 1983, was reassigned as an engineer manager in the company's Saab-Fairchild SF340 turboprop airliner program.
Sandford said he joined George Attridge, who became chairman of Fairchild Republic in March, in an effort to "overhaul" the company. Sandford formerly was president and vice chairman of deHavilland Aircraft, a major Canadian manufacturer.
He said that as the Air Force report was being prepared, the company's new management team was examining each criticism and developing a plan of corrective action.
Since then, the company has increased its work force 15 percent to about 4,200 workers, Sandford said. It has boosted by 33 percent the number of employes who maintain workplace standards, has increased by 20 percent the number of inspectors who check to make sure work is done according to contract specifications, and plans to add 20 percent more inspectors by year-end, he said.
Fairchild Republic is conducting training programs for supervisors and holding special classes for workers "to point out where we have not been building parts correctly or up to government standards," Sandford said.
As for problems pointed out by the Air Force review, Sandford said "we were not allocating manpower and energy appropriately, our priorities were wrong."
For example, upper management did not monitor quality control, the section that checks how well products are made. Now the department has been elevated in importance so that it reports to the president. The company also has combined certain operations to improve efficiency and productivity, he said.
There remain "large milestones to overcome" before the company is operating "up to our own standards," Sandford said, predicting that the company will reach that point some time next year.
The company plans to retrain all its supervisors, install new equipment to boost productivity, and install new information systems, he said.
"Obviously we want to get the Air Force to restore full progress payments as soon as possible," Sandford said, declining to guess when that might be.
Fairchild was awarded a $136 million contract to build two prototype T46s and another $63 million contract for the first 10 aircraft, and expects to win contracts worth $1.5 billion for an additional 640 of the airplanes.