General Dynamics Corp. persuaded the Air Force in early 1982 to buy 24 types of tools and components that the defense contractor recommended for maintenance of its F16 jet fighters.
According to a General Accounting Office report released yesterday, the contractor's shopping list, for which the Air Force initially issued a blank check for up to $1.68 million without questioning the need or cost of the items, included:
*A maintenance test stand, purchased for $163,843, which is not used for the repair task identified by General Dynamics and remained in storage as of July.
*Four types of radar antenna tools, priced at a total of $41,514, which the Air Force finally produced for itself for $995. An Air Force technician had substituted simple wire for one of the recommended tools, an alignment pin, two of which had been priced at $9,376.
*A $3,626 in-flight refueling adapter, which the Air Force bought and then lost.
*A pulley tool, which was purchased for $8,832, then reduced to $370 after complaints by Air Force Secretary Verne Orr. The tool does not work as intended.
*Several tools that the Air Force paid to engineer and test although similar implements had already been designed for the F16.
The GAO report was released by Rep. John D. Dingell (D-Mich.), who called it "devastating" and accused General Dynamics and one of its F16 subcontractors, Westinghouse Electric Corp., of a "plot" to gouge the government.
"This is not sloppy business practice; this is fraud," Dingell, chairman of the House Energy and Commerce investigations subcommittee, said in a letter to Defense Secretary Caspar W. Weinberger.
General Dynamics spokesman Al Spivak denied that fraud was "involved or intended" and said his company now discourages government purchases of equipment in "uneconomical quantities" that elevate the price higher than "the apparent intrinsic value" of the item. He said the Pentagon is advised to acquire tools and other parts directly from subcontractors rather than go through General Dynamics.
L.B. Moore, a Westinghouse spokesman, said the "accusation of defense contractor fraud is totally unfounded."
The report was intended as a case history of "unpriced contract modifications," a Defense Department provision that permits the armed services to order urgently needed military equipment from contractors without first negotiating costs. Final costs of the items are required to be set within 180 days of their authorization.
Dingell directed the GAO to focus on the Air Force's 1982 order from General Dynamics of F16 support equipment after earlier disclosures that the package had included an Allen wrench priced at $9,609.
Most of the equipment recommended by General Dynamics, prime contractor for the F16, was for repair of the combat jet's fire-control radar antenna. The Air Force needed the tools to outfit Ogden Air Logistics Center in Utah, which was to begin in-house maintenance in late 1984 to reduce reliance on contractor repairs.
Officials at Wright-Patterson Air Force Base in Ohio approved the recommendations in September 1982, invoking the special "unpriced modification" provision. General Dynamics and Westinghouse, which makes the radar, were authorized to spend up to $1.68 million for the items.
According to the GAO, the Air Force officials approved the package without analyzing need, value and price.
Officials failed to examine technical manuals describing repair procedures performed by the items or to obtain specific cost estimates from General Dynamics, the report said. One instrument recommended by the contractor and approved by the Air Force -- an antenna clamp alignment tool -- was later canceled after it was discovered that another item performed the same task.
The GAO also questioned the "extent of urgency" of the order because 15 of the items ordered in September 1982 were for use by the Ogden center more than two years later.
A final price of $835,835 for 16 pieces of equipment and four drawings was finally reached as long as 20 months after the order, far exceeding the 180-day rule, according to the report.
The GAO criticized the costs as excessive and blamed the Air Force for giving up its leverage in establishing reasonable prices before items were ordered.