Precious Parts

$16 one year, $3,033 the next

The frequency with which the final costs of multibillion-dollar weapons systems balloon far beyond original estimates is an all too familiar Pentagon embarrassment. Air Force auditors think they have put a finger on a related problem: the multiplying price of mundane spare parts.

At Oklahoma's Tinker Air Force Base, watchdogs programmed their computers to detect increases of 300% or more in the cost of spare parts for aircraft engines charged by the Pratt & Whitney Aircraft Group of United Technologies in fiscal year 1982. The results, said an auditor, were "staggering." Robert S. Hancock, an official of the Air Logistics Center near Oklahoma City, said that in just the one year, Pratt & Whitney's "repricing" policy had cost the Government "something on the order of $140 million." He termed the findings "only the tip of the iceberg" and contended that Pratt & Whitney "has never learned how to control cost or operate efficiently."

The preliminary Air Force findings included 35 examples of especially astounding price increases. Pratt & Whitney, for example, charged the Air Force $16 for a turbine air seal on engines that power the F-111 fighter in 1981; a year later it priced the same part at $3,033.82--an increase of 1,886% at a time when inflation was running at 8.9%. The firm's explanation: its own clerk had listed the 1981 price too low. A part used in mounting engines in C-141 transports and B-52H bombers rose in price from $77.28 to $1,016.70, an increase of 1,215%. Reason: again, clerical error. A major component of the engine for the F-14A fighter zoomed 442%, from $35,189 to $190,855. Reason: the price of titanium rose and a new supplier produced a relatively small number of the parts, boosting the unit price.

Officials of Pratt & Whitney, which last year sold nearly $3 billion worth of aircraft engines, spare parts and services to the U.S. military, said they had reviewed the $140 million in total increases and found that $101 million "has been justified." The remaining $39 million, they said, would be "negotiated" with the Government. The company claimed that its spare-parts prices had risen about 20% in each of the past two years, "representative of the aerospace industry." But Hancock disputes this, arguing that the price of Pratt & Whitney spares went well beyond "an average price increase." The Air Force has expanded the inquiry to parts supplied by Pratt & Whitney for the F100 engine, which powers the latest F-15 and F-16 fighters. High executive salaries also are under study as a possible partial cause of the company's price increases.

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