Word: 5a
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Dates: during 1970-1979
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...audits. Accordingly, the Defense Department refused to let GAO officials write down any figures from Lockheed's cash flow statement-which usually gives a broad picture of a company's finances-before reporting to Congress this month on $2 billion of cost overruns in producing the C-5A transport aircraft. Congress will have to decide later this year, partly on the basis of the GAO's report, whether to vote Lockheed more money to continue producing...
...approximately 22,000 contracts that the military services let each year. Kaufman insists that "literally every contract is a horror story." He cites case after case of overruns, from the Gama Goat, an amphibious cargo carrier that cost $304 million more than expected to develop, to the C-5A and General Dynamics' F-111 fighter-bombers, which went up from $4,000,000 to $13.7 million each...
Inflation and Shortage. Defense contractors see the problem in a different light. Lockheed, for example, blames much of its trouble on former Defense Secretary Robert McNamara's Total Package Procurement, under which the company agreed in 1965 to deliver the C-5A four years later at a fixed price. In between came inflation and shortage of parts and machinery during the Viet Nam buildup of the mid-1960s. The result, says a Lockheed spokesman, was "the emergence of catastrophic risk-risk of a magnitude that could bankrupt defense contractors and their subcontractors, and perhaps even threaten the survival...
...washed out, it is conceivable-though highly unlikely-that Lockheed would have to cancel the TriStar and follow Rolls into bankruptcy; in that case, the Pentagon would doubtless find some way to keep Lockheed producing C-5A cargo planes and Poseidon missiles. The issues are serious enough to have prompted at least one transatlantic telephone conversation between President Nixon and British Prime Minister Edward Heath...
Going on Welfare. To forestall collapse, two giant corporations went on public welfare. At the Pentagon's urging, Congress last month voted a $200 million "contingency" payment to Lockheed Aircraft to help cover $758 million of unexpected costs in producing the Air Force's C-5A jumbo jet. The $200 million was only the first installment in a financial rescue that could well cost the taxpayers at least three times as much. Without such aid, said Deputy Defense Secretary David Packard, Lockheed faced bankruptcy, and other defense subcontractors could go under in its wake. Last week, however, Lockheed...