The taxpayers are paying $1.6 billion to put new wings on the Air Force's 77 C5s, the world's largest airplanes, and for that, the General Accounting Office says, they can thank the Defense Department and Lockheed Corp.
Sen. William Proxmire (D-Wis.) released an 89-page report by the congressional watchdog agency yesterday with a warning that "if anything goes wrong after one year, the taxpayers will foot the bill again."
"Lockheed has refused to warrant the C5's new wings," Proxmire said. "Instead, the Air Force agreed to a limited warranty on the test model and a one-year warranty for design and workmanship for each aircraft."
The report may figure in upcoming Senate debate on the Pentagon's hotly disputed multibillion-dollar proposal to buy 50 C5s for the Rapid Deployment Force.
The report says that by June, 1966, nine months after the Defense Department picked Lockheed's airframe design over Boeing's and Douglas Aircraft's, Lockheed knew of "serious problems" in holding the weight of the C5 to the 159 tons Lockheed had agreed to in signing the formal contract seven months earlier, let alone to the 151 tons it had proposed at the outset.
To shave five tons, the report says, Lockheed "deviated" from the contract by using thinner aluminum for the wing surfaces than called for in the specifications.
The most important result was a drastic reduction in the time the C5 could be aloft safely. The contract set an operating requirement of 30,000 hours; the Air Force now assumes only 7,100 hours. Moreover, this reduced service life assumes a payload of 81.4 tons, 74 percent of what Lockheed had proposed, and a range of 5,000 nautical miles, 86 percent of its original stated target.
Another result was the purchase of new wings to give the C5s an additional 30,000 hours in the air. Lockheed will have "profits of over $150 million" from the wing contract, the report estimates.
Turning to the Air Force, the report says it knew even before Lockheed was chosen that its "proposed cost, schedule and performance guarantees were unrealistic. By 1967, the Air Force had acquired engineering data from Lockheed which indicated the wing designs might impair . . . future operational capabilities," and by April of that year it had "learned of the potential for serious wing problems."
Knowing that the wings were deficient, the Air Force in December, 1969, accepted the first C5, but reserved the right to negotiate a settlement with Lockheed. Citing a need for the plane's unique capacity to airlift heavy equipment, the Air Force continued to accept C5s with deficient wings.
Meanwhile, Lockheed had gotten into deep financial trouble, raising a question about whether it would produce all of the C5s the Air Force wanted. As a result the Pentagon ordered a rescue of Lockheed. Specifically, David Packard, then deputy secretary of defense, directed the Air Force to implement its proposal to:
* Convert the contract from one with a fixed price and an incentive to hold costs down to one that would reimburse Lockheed for its costs and for a loss of up to $200 million. The cost to the taxpayers is estimated by Pentagon sources at $1 billion.
* Relieve Lockheed, in the GAO's words, "of any liability to correct deficiencies in aircraft which had already been delivered and required the government to bear the cost of any fix, no matter what it entailed or when it was installed."
At the time, in May, 1971, the Air Force assumed that fixing the wings would be relatively easy. Not until four months later, after the fixed-loss settlement had been executed, did it get the structural data showing that drastic modification, or possibly replacement, would be required.
Proxmire commented yesterday: "The Lockheed and government officials responsible for the decisions to deviate from the contract and shift the burden of paying for the mistake from the company to the taxpayers should have resigned from their positions long ago."
He requested the GAO report in November, 1980, after hearings that surfaced a 1973 declassified study in which Rand Corp. urged the Air Force to reexamine its demand for a 30,000-hour C5 service life.
At a much lower cost than wing replacement, Rand said, wing modifications and continued limits on the use of C5s could extend their useful life to the year 2000. The GAO said the Air Force's "unyielding commitment" to 30,000 hours drove it "subtly and increasingly" to the "single conclusion" that the wings had to be replaced.
The GAO, noting that the Pentagon and the Air Force found its report "factual" and "reasonable," termed the wing episode "but the latest of a series" of problems "plaguing" the C5 over its 17 1/2-year history.
The best-known example was the $2 billion overrun that senior Pentagon and Air Force officials had tried to conceal but that Air Force official A. Ernest Fitzgerald disclosed in November, 1968.