Troubles in C-5A Galaxy Manufacture
by The C-5A transport aircraft is the second largest airplane in the world. It was originally conceptualized in the 1960s, when the U.S. military establishment hoped to create a fleet of aircraft that could move large numbers of troops and equipment to any place in the world within a matter of days.
Though critics charged that such a move would upset the world military balance and possibly cause more harm than good, the U.S. Air Force invested money in three companies to develop proposals for a new fleet of aircraft. Boeing, Lockheed, and Douglas, the three companies involved in the original bidding process, projected program costs of $2.3 billion, $2.0 billion, and $1.9 billion, respectively for the fleet of planes. The design offered by Boeing was originally accepted but later overruled in favor of Lockheed. Several competing hypotheses have been offered to explain why Lockheed was awarded the contract. One prominent argument is that the Department of Defense wanted to retain Lockheed as a defense contractor in current and future projects. In fact, Lockheed was the government’s primary producer of Poseidon and Polaris missiles. Had Lockheed not won the contract, thousands of people at Lockheed’s Marietta, Georgia, plant would have been forced to find new jobs.
In November 1968, A. Ernest Fitzgerald, a civilian cost analyst for the Air Force, testified before a Congressional subcommittee that the 120 C-5A cargo jets ordered by the Air Force would cost $2 billion more than anticipated and that the increased expense was partially the result of financial mismanagement. By early 1969, Lockheed’s original program cost of $16.5 million per aircraft was increased to $40 million. At the peak of the Vietnam War, out of control cost and waste are ordinary in the war industries. According to the contract, two production runs would occur; the first would be priced according to the original bid. The second production run would incorporate the costs from the previous run.
During the initial production run, Lockheed sent a year-end financial report to the Air Force showing no serious problems in the cost of the program. However, when the Air Force sent a team to Lockheed’s production plant to examine the financial data, it was discovered that the company was facing a potential loss of $316 million. Only months earlier, a report from then Secretary of Defense Robert S. McNamara claimed that Lockheed faced increased program costs totaling $240 million.
The exact figures for the program overrun were difficult to determine. However, the financial collapse of the program was public knowledge inside the office of the Secretary of Defense. This led many to conclude that Lockheed was attempting to conceal the enormous additional costs of the program in hopes of making a profit during the second phase of production. As further reference to the possibility of a multimillion-dollar cover-up, the March 1968 ceremony for the formal launching of the C-5A included large press kits stating that the larger-than-life plane had met all cost and production expectations. In one sense, Lockheed was correct. Through a series of lengthy cost reviews, budget modifications, and deletion or omission of financial data, it was possible to conceal the fact that production costs had exceeded established ceiling costs by hundreds of millions of dollars. Despite inaccurate cost figures, the U.S. Air Force finalized commencement of the second production run in January 1969. All that remained was for Congress to allocate the money.
At that time, however, stories of the waste and fraud in the C-5A program started to surface. An investigation into defense spending by the General Accounting Office (GAO) reported that the Air Force paid $317.79 for the toilet pan used on the C-5A. The GAO report also revealed that a common Allen wrench, one of the tools kept onboard the aircraft, cost $9,606. The Allen wrench could have been purchased for less than $1.00 at a hardware store. Other stories of gross financial abuse included payments for $400 hammers and $7,400 coffee makers. Interestingly, the official reason why the coffee maker for the C-5A aircraft cost so much was because it had been designed to withstand 17 Gs. However, the wings of the plane were not able to withstand the same amount of force. The C-5A is manufactured prior to a complete test, which caused to 12 year long wing modification troubles and cost $1.3 billion.
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