If ever there was a tale to come along that indicts the defense procurement system, it was the one that surfaced last week about the Air Force, the Boeing Military Airplane Co. and the $748 duckbill pliers used to repair airplane engines. When it comes to waste and inefficiency in the federal government -- one of President Reagan's favorite targets -- this is one for the record books.
The way the procurement of the duckbill pliers unfolded, it should be noted, taxpayers ought to be thankful they only paid $748 apiece for them. The price started out at a mere $5,096 for two pliers when Boeing priced them in 1983. According to the story in The Washington Post, that price included $305 for the two pliers and Boeing's surcharge for buying them, and $4,791 for what the Air Force described as "management support tasks and profit."
The story continued: "Air Force price analysts concluded that the price was too high and negotiated with Boeing for almost six months. On March 2, the Air Force signed a contract that included $1,496 for the two pliers." In a memo to Sen. Charles E. Grassley (R-Iowa) the Air Force noted that this was a 70 percent reduction. In the same memo, the Air Force acknowledged that common pliers "probably could have been made to work." An engineer who testified before Grassley's Judiciary subcommittee on administrative practices and procedures last June said similar pliers could be bought at a hardware store for $7.10.
The upshot of his testimony was that Boeing cut the cost of the pliers to $90 -- we're talking bargains here, by now -- but Boeing revised its overall proposal to include $95,307 for "support equipment and management." The total price of the pliers and other tools included in the proposal remained the same: $557,500.
So much for Pentagon cost-cutting.
After the story appeared, Maj. Gen. Bernard L. Weiss, director of contracting and manufacturing policy for the Air Force, called the reporter and said that the first Boeing proposal for the two pairs of pliers and 66 other tools had been $884,579, and that Air Force contracting officers should be credited with negotiating the cut to $557,500. He also said that, as of December, the Air Force was buying directly from manufacturers, rather than prime contractors -- a rather breathtaking acknowledgment of unnecessary boondoggles to middlemen.
The duckbill pliers story speaks volumes about defense contractors feeding at the federal trough and the tolerant attitude of the military procurement establishment that enabled Boeing to submit an exorbitant proposal in the first place. Instead of sending the original proposal back to Boeing with "Are You Nuts?" crayoned in red across the top, the Air Force took six months to negotiate a $327,000 price cut -- negotiations that were financed by taxpayers who pay contracting officers' salaries. In the end, Boeing and the Air Force agreed to tuck the $95,307 away in "support equipment and management," an amorphous term, which has the great advantage of being much more difficult to audit than the cost of a pair of pliers.
Weiss defends this, however, claiming that it gives a more realistic price for the pliers and allows the Air Force to better analyze overhead costs. Part of the overhead cost involved $30,648 for "proposal preparation," which included more than 1,200 pages of computer-generated background information, or an average of 23 pages per tool. This sounds like a remarkable literary achievement, even in the annals of defense procurement. No doubt some of the overhead costs came in the form of paying Boeing personnel to negotiate with the Air Force over the price cut.
This story comes at a particularly unfortunate time of year, when a great many taxpayers are getting ready to write checks to the government. The average taxpayer forked over $3,536 in 1983, according to the Internal Revenue Service. It would take every cent of taxes paid by 27 people to pay for the $95,000 for "support equipment management" and there is no doubt here that every one of those 27 people would be smart enough to figure out a cheaper and more efficient way of getting some pliers.
What it all boils down to is a matter of attitude: Taxpayers are getting sick of hearing stories about how their money is being squandered on $600 toilet seats and $748 pliers. But you can't blame Boeing for trying to bill the government for whatever it can. Its money is not at stake. According to a Citizens for Tax Justice study, Boeing is among several big defense contractors who haven't had to pay any taxes since 1981.