Assault on Costs

Air Force Materiel Chief Lieut. General Mark E. Bradley Jr. last week gave a blunt warning to Air Force contractors: "There's too much gold plating and fanciness. I intend to raise hell as long as I am here until I get some action." The action he wanted was to eliminate waste and overcharging in Air Force procurement. Bradley said that $100 million has already been trimmed out of the revived B70 program "by cutting out fancy items that were put in there to do the job just a little better. You can do the same job, perhaps a little less well, but for a lot less money."

To broaden the attack on costs a top-level committee of General Bradley, Air Force Controller Lieut. General William D. Eckert and Inspector General Lieut. General Joseph F. Carroll last week launched 70 specialists into the field to survey management practices of Air Force prime contractors. First to be studied is Martin Co., Titan missile prime contractor. Martin was picked because the Titan program is at the stage where catching mistakes might save money. The Atlas missile program is too old, the Minuteman too young.

Bradley spelled out some of the suspected abuses:

P: Bids are often padded by as much as 15% to 20% on incentive contracts in which the manufacturer is rewarded for savings he can show by producing the item for less than the bid price.

P: Costs are often set unrealistically low to win cost-plus contracts. When the costs later soar, the Air Force is stuck paying them, plus a fixed profit

--usually 10%. P: Items that could be bought more cheaply from subcontractors are too often made by prime contractors to keep the business for themselves. When prime contractors do go to other sources, they do not watch the costs of subcontractors as they should.

Not every defense contractor is guilty, General Bradley said. In fact, some have taken notable steps to cut back expenses, e.g., one saved $7,200,000 by a 40% reduction in nonproductive personnel; another saved $1,200,000 through centralized purchasing. But all this is not enough. Congress has told the-Pentagon to report in January with a record of cost cutting. General Bradley called on industry "to do some soul and corporate body searching" before Congress is pushed to make arbitrary across-the-board slashes in appropriations.

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