The federal government is now winding down its most successful property sales program ever -- the sale of old Defense Department industrial plants and equipment to private contractors.
Over the past 21 years, the General Services Administration has sold 114 industrial plants for $388.8 million, all but five of them through negotiations with the contractor who had been running the plant for the military.
The industrial plants "have always made up a majority of the sales program," said Earl E. Jones, the assistant commissioner of real property for the General Services Administration. But, he said, there aren't that many left.
It won't matter to the Reagan administration, though, if it makes good on its plans to sell off $17 billion worth of federal buildings and public land over the next few years.
GSA currently is trying to sell nine DOD industrial plants--many of them high-security facilities--as well as 19 lots of heavy-duty equipment. GSA would not put a price tag on the properties and equipment, but they were worth $225 million when acquired at least 20 years ago.
The Defense Department still owns 77 plants, all but 10 of them run by private contractors, and is expected to retain ownership of most of them.
"There is no directive to get rid of them," said Richard E. Donnelly, the Pentagon's director for industrial resources. "We do have a policy that makes it our responsibility to have a maximum reliance on the private sector for the industrial base. Where we can, we would rather have the plants run by the private sector rather than in our own captive defense base -- that tends to keep them more modern."
Some of the industrial plants date to World War II.
"The United States found it did not have much of the capability that the Germans had," Jones said, so it built the plants and hired contractors to run them.
James H. Pitts, the GSA official who is responsible for the sales program, said private industry "had no intention" of footing an enormous bill to construct a facility without the guarantee of a market for a defense-related product.
With one exception, all the plants were started before 1962. In 1979, DOD started work on a facility in Mississippi that will make a new kind of 155mm shell when it is completed soon.
Under the agreements for operating the plants, the firms had to agree to make the product that DOD wanted. If the Pentagon decided it no longer needed a facility, then GSA would negotiate with the firm until an agreement was reached on the plant's fair market value. That usually occured when the firm decided it could put the facility to a more profitable use.
The program usually escapes controversy, but last year, when the GSA tried to sell Air Force Plant No. 63 in North Grafton, Mass., to the Wyman-Gordon Corp., a snag developed when a California firm sought the right to bid on the property. Eventually it was transferred to Wyman-Gordon for $34.45 million--the second largest negotiated sale in the program. The largest was the sale of Air Force Plant No. 13 in Wichita to the Boeing Co. in 1979 for $44.75 million.
Air Force Plant No. 4 in Fort Worth, Tex., a 40-year-old industrial facility with a mile-long assembly line, turns out F16 jet fighters. Last summer the White House proposed selling the plant to its operator, General Dynamics, for $1 billion to help reduce the national debt.
But the idea has gone nowhere. Local officials and House Majority Leader James C. Wright Jr., who represents Fort Worth, opposed the proposal and General Dynamics officials said that it made more sense for the government to own the plant and let them run it.
"Selling some of these plants to the contractors who operate them is not always easy," Jones said, because they know the equipment is often 30 years old and could break down at any time. Nevertheless, most of the huge heavy hammers and forges are still considered the "state of the art" for the metal-shaping industry.