TIME: Almanac 1993/TIME Almanac 1993.iso/time/012191/0121100.000

Text File | 1992-08-28 | 8KB | 178 lines

                                                                                NATION, Page 45

Death of the A-12


No more blank checks, insists Defense Secretary Cheney as he
shoots down a $57 billion Navy attack bomber

By ED MAGNUSON -- Reported by Staci Kramer/St. Louis and Jay
Peterzell/Washington


    With the U.S. poised on the brink of war, it seemed an odd
moment to shake up the nation's military-industrial complex.
But that did not deter Defense Secretary Dick Cheney last week
from canceling the Navy's A-12 Avenger attack bomber and
sending military contractors the clearest signal yet that the
Reagan-era good times are over. The old buddy-buddy
relationship between the Pentagon and arms makers who blithely
exceed contract costs and expect taxpayers to pick up the tab
has ended.

    As the tough-minded Cheney shot down a program that had been
expected to produce 620 of the high-tech stealth aircraft at
a cost of $57 billion, he implicitly emphasized another
military reality of the 1990s: the U.S. simply cannot afford
many of the multibillion-dollar weapons systems that were
started during Reagan's $2 trillion defense buildup and now
continue to escalate in price.

    The attempt by the Soviet Union to compete in this arms race
contributed heavily to its economic collapse and may have
hastened the end of the cold war. But if the military spending
splurge is not sharply curtailed, it could endanger the U.S.
economy as well. "We have an unusually large number of new
programs that are hitting a decision on full-scale
procurement," explains Gordon Adams, a private defense
specialist. "This fiscal bow wave is hitting just as the money
is running out."

    Cheney's abrupt action showed too that the shriveling of the
defense budget is little affected by such immediate emergencies
as a potential war in the Persian Gulf. For contractors, the
long- and short-term trends are contradictory. As the
developers of new weapons systems face increasingly tough
times, suppliers who meet the needs of Desert Shield with such
items as boots, camouflage netting and gas masks are enjoying
an unexpected -- but presumably brief -- bonanza.

    Cheney reached his dramatic decision to scrap the A-12 after
a tense six-hour debate in his Pentagon office. Navy Secretary
Lawrence Garrett and his top acquisition officials tried to
persuade the Defense Secretary and Joint Chiefs Chairman Colin
Powell that the Avenger should be saved even though the program
was running $2.7 billion over its fixed-price contract cost of
$4.8 billion for development alone. It was also  18 months
behind schedule.

    The Navy suggested the usual fix. It would buy fewer planes
than planned and stretch out the delivery dates. Cheney could
ask Congress to provide $1.4 billion in extra costs; the two
manufacturers, McDonnell Douglas and General Dynamics, would
then be covered and content. Development of the advanced plane
could proceed. That was the way contractors and their military
supervisors had long done business.

    But Cheney was not buying. If he did go to Congress and
managed to scrape up the $1.4 billion, he kept asking, would
the contractors then develop the eight prototypes and meet all
the contract terms? Or would they run over budget again? "The
bottom line was that no one could tell Cheney how much money
it would take to finish the development program," explained a
defense official. "They couldn't say that $1.4 billion would
be enough. And he wasn't going to write any blank checks."

    Cheney decided he would not beg Congress for the money now,
only to return later and plead for more. He ordered the Navy
not to try an end run by seeking out friends on Capitol Hill
to find the funds. Then he courageously killed the program.
Said Cheney: "If we cannot spend the taxpayers' money wisely,
we will not spend it."

    The action was especially gutsy since there are no firm
plans for an alternative to the Avenger. It was meant to
replace the fabled but aging A-6 Intruder, first deployed in
1963, as the Navy's basic carrier-based attack bomber. The
stress of jarring carrier landings for such a long time has so
weakened at least one-third of the Intruders that their pilots
have been ordered to restrict certain maneuvers lest the planes
fall apart.

    The Avenger was designed to carry a bomb load much farther
than the Intruder, which can tote 10,000 lbs. over 650 miles.
The new aircraft had been seen as ideal for delivering bombs
deep into the Soviet Union after leaving its carrier. Its
profile on radar screens was less than 20% that of the
Intruder.

    With the warming of U.S.-Soviet relations, Navy critics
contend, the Avenger had lost the urgency of its main mission.
Yet its demise was prompted mainly by a series of scandalous
failures that were typical of the way the military acquires
most of its big-ticket weapons systems. When the A-12 contract
was let in 1988, the McDonnell Douglas-General Dynamics team
bid $1 billion less than its competitor, a Grumman-Northrop
consortium. Since the bid was unrealistically low, the Avenger
contractors quickly ran into excessive costs and slipped behind
schedule.

    If that was to be expected, the subsequent behavior of
McDonnell Douglas and General Dynamics, both based in St.
Louis, was not. According to reports last year by the Navy and
the Pentagon's inspector general, the two contractors hid these
problems from the Navy officers supervising the work. The
manufacturing executives falsified some of their reports,
according to the Navy, because they were under intense pressure
from their corporate bosses to "maximize cash flow."

    The Navy failed to detect the continuing deception because
of a persistent Pentagon problem with its advanced projects:
so much of the work was highly classified that there were not
enough competent auditors with clearance to examine the bills.

    When top Navy and Pentagon officials belatedly learned of
the Avenger mess, they downplayed it and ignored the
implications. That led Cheney last April to assure Congress
that the program was on track in both time and cost. After he
learned that this was untrue, two high Navy officers were
removed from supervising the contract and censured; in
addition, an admiral was fired, and the Pentagon's top
procurement officer resigned. The Justice Department has begun
a criminal investigation of whether the contractors overcharged
the Navy. And the Pentagon said it will try to recover the
funds already spent in excess of the contract terms.

    Spokesmen for the two contractors insisted that they had not
defaulted on the contract and said they would seek payment of
all their claims against the government. They attributed the
problems to a recent Pentagon practice that they consider
unrealistic: insisting that a fixed price be determined in
advance for projects that are, as a General Dynamics spokesman
said, "on the cutting edge of technology."

    Both companies began carrying out previously announced
contingency plans to lay off large numbers of workers.
McDonnell Aircraft Co. started to hand out pink slips to some
5,000 workers, mostly in St. Louis, while General Dynamics
targeted 4,000 employees for dismissal in Fort Worth and Tulsa.

    But if there was gloom over the crash of the Avenger,
McDonnell Douglas and General Dynamics have other military
projects going to keep them in business. The two companies
expect to benefit marginally by selling arms to Saudi Arabia
as part of a $7.1 billion package approved by the
Administration last fall in a Desert Shield trade-off. McDonnell
Douglas will sell 12 Apache helicopters to the Saudis for $144
million, and General Dynamics will provide 150 M-1A2 tanks
costing $480 million.

    Cheney's crackdown on the A-12 was actually in line with the
get-tough policy he has been pursuing for months. He had
previously approved the killing of the Marine Corps's V-22
Osprey vertical-takeoff plane, the Navy's Lockheed P-7
antisubmarine patrol aircraft, the Army's FOG-M (fiber-optic
guided missile) and an Air Force plan to place the MX missile
on rails. Said a Pentagon official of the new procurement mood:
"Programs that are bleeding cannot survive."