More Waste in the Military Industrial Complex: U.S. Air Force Makes $2.6 bn “Mistake” in Favor of Lockheed Martin, Inc.

Air Force Faulted on 50-Plane Purchase: Transport Craft Fail Key Readiness Tests

24 July 2004 | Washington Post [page A-1]

by R. Jeffrey Smith

The Air Force spent $2.6 billion to buy 50 transport planes that do not meet the military’s requirements, preventing squadrons based in six states from being fully prepared for their missions in the Middle East and elsewhere, the office of the Defense Department’s inspector general disclosed yesterday.

After conducting a lengthy investigation set off by a whistle-blower’s phone call, the inspector general’s office concluded that the Air Force used an inappropriate procedure to buy the C-130J transport planes from Lockheed Martin Corp. and then mismanaged its production. It also said that senior Defense Department weapons-acquisition officials failed to provide the program with “effective oversight.”

The 34-page report from the inspector general’s office is its second major critique this year of the Air Force’s top acquisitions official, Marvin R. Sambur. In April, Joseph E. Schmitz, the Pentagon’s inspector general, accused Sambur’s office of mismanaging contract negotiations for the production of a refueling aircraft derived from the Boeing 767. Schmitz said the Air Force had circumvented the required procedures to sign a contract costing from hundreds of millions to several billions of dollars more than necessary.

A classified paragraph in the April report said the Boeing 767 program shared “the same unsound acquisition and procurement practices that are currently evident in the C-130J program.”

Sambur, in a statement appended to the new report, said that the C-130J program is “properly managed,” the manufacturer is meeting its delivery schedule and the planes have been cleared to drop equipment over land and water and to conduct medical evacuations. The planes will soon be able to perform other missions, including airdrops of troops and heavy equipment, he said.

Other military officials confirmed yesterday that the planes have not passed key readiness tests, and so no C-130J has been used as planned by the Air Force Reserve, the Air National Guard or the Marine Corps in combat zones or military assaults. Specially modified versions have also not been approved for psychological operations and electronic warfare or for monitoring hurricanes.

That means that two squadrons in Mississippi — as well as others in California, Rhode Island, Maryland, North Carolina and Pennsylvania — are either relying on a dwindling number of older planes to assist the military’s Central Command or are unable to carry out their missions at all, according to the report, signed by Assistant Inspector General Mary L. Ugone.

Air Force and reserve officials said yesterday that pilots are training for these functions and that the planes may be ready for more missions within the next year or so. Lt. Col. Guy Walsh, commander of the 175th Wing of the Maryland National Guard in Baltimore, confirmed that the C-130J transport planes that the wing has had since 1999 or 2000 are still not rated as mission-ready and are undergoing modifications at their base. But he said that “the progress I’ve seen has been tremendous.”

Maj. Wayne Bunker of the Marine Corps Aerial Refueler and Transport Squadron 252, based in Cherry Point, N.C., said he has a “favorable” attitude toward the dozen new C-130Js that have been based there for the past 18 months. But, he said, that “it’s not desirable” to be unable to use them operationally, and that making the transition from an older squadron has been burdensome. The aerial refueling pod on the C-130Js never worked, he said, forcing mechanics to pull the pods off older planes and to retrofit them onto the new ones.

An Air Force spokeswoman declined to comment. But Lockheed spokesman Joe Stout said in a written statement that the C-130J program is meeting cost, schedule and contracting commitments and that the company supports the written comments of Sambur. He also noted that Australian, British and Italian military pilots have flown the plane into Iraq and Afghanistan.

The C-130J was conceived by Lockheed in the mid-1990s as a commercial aircraft and was sold to the Air Force as an “off-the-shelf” plane requiring minimal modifications for military use. But Lockheed has not sold a single one of the propeller-driven planes to a commercial user, and the purchase price of a basic plane has risen steadily from $33.9 million in 1995 to at least $62 million in 2004.

The planes are undergoing a fourth set of modifications and, as of the end of 2003, had 33 outstanding deficiencies considered capable of causing “death, severe injury or illness, major loss of equipment or systems, or directly restrict[ing] combat or operational readiness,” according to the inspector general’s report. Congress has approved spending $4 billion for the planes, and the entire program is likely to cost more than $7.5 billion.

Under Pentagon contracting rules, commercial-style acquisition relieves contractors of the obligation to furnish cost and pricing data to military auditors. It also means Pentagon reviews of the production are truncated, and it enables contractors to be paid — often in full — for weapons systems before they have been tested to ensure that they meet combat needs.

In eight years, the inspector general’s report said, “not one C-130J delivered aircraft was fully compliant with the contract specification. . . . The Air Force did not properly manage the program.” It cited the fact that Sambur’s office paid Lockheed “almost the full price” for every deficient plane and approved a new multiyear contract in March 2003 despite the absence of a “stable design.”

“It’s pretty outrageous,” said Eric Miller, an analyst at the Project on Government Oversight, a nonpartisan research group that has studied the C-130J program. “Cooperation with a defense contractor is one thing, but turning a blind eye to inferior workmanship is another. . . . It makes you wonder if anybody cares or is accountable.”

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