The battle over weapons warranties
Can the Pentagon shop around for tanks the way consumers do for toasters? If a missile fizzles in its silo, can Uncle Sam insist that the manufacturer fix it?Skip to next paragraph
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The Reagan administration and Congress are wrangling over two important defense management issues that could have significant impact on the cost and effectiveness of United States military forces: competition in awarding Pentagon contracts and warranties on weapons systems.
Lawmakers - with Republicans in the forefront - are pushing for more competition and stiffer warranties.
Defense Department officials insist that they agree in principle on the issues, but want more flexibility to seek the most cost-effective means of competing for and guaranteeing the performance of tanks, planes, and ships.
Congressional critics see this as foot-dragging on the part of the military bureaucracy. They are pushing a ''creeping capitalism'' bill that would gradually increase the amount of defense procurement funds that must be advertised for competitive bid from 6 percent at present to 70 percent of the total. And they are resisting Pentagon and industry efforts to water down a new warranty law that just took effect.
Both sides point to recent action by the Air Force as an example of how things should work in the huge and complex world of weapons buying. The Air Force had manufacturers compete for the right to build engines for its two top-line fighters, the F-15 Eagle and F-16 Falcon. The competition included relative worth of the warranties offered.
The Air Force split the contract between the two companies, and retained the right to adjust the contracts awarded, based on performance. Officials estimate savings over the life of the aircraft at more than $2 billion due to the competition. But Pentagon officials note that the warranties in this case do not conform to the type recently imposed by Congress. As a result, they say, they would have had to get a waiver from lawmakers.
The new warranty law, which went into effect last week, obliges weapons builders in all cases to fix (or bear the cost of repair) any weapon or part that doesn't meet performance requirements. Defense officials argue that this does not necessarily result in the lowest cost and best performance. In some instances, they say, it is better to train military personnel to do the work, especially aboard ships or on bases overseas.
''Warranties are not free,'' said William H. Taft IV, deputy secretary of defense. ''If a certain risk can be more cheaply assumed by the government than by the contractor, then it doesn't make any sense to pay him to assume it. We think we can do it cheaper in many instances.''
Sometimes, he added, it may be much cheaper and more effective to insist on just a short-term warranty from the manufacturer (the first several hundred hours of aircraft engine operation, for example) to prove that the government hasn't bought a lemon.
Sen. Mark Andrews (R) of North Dakota, author of the new warranty law, calls Pentagon protestations ''a smoke screen covering its refusal to go along . . . with the first systemic reform in the past 30 years.'' He likes to cite the warranty on his tractor back home and says: ''There's no magic about it - it works!''
Thirty-five members of the bipartisan Military Reform Caucus on Capitol Hill, led by Rep. James A. Courter (R) of New Jersey and Sen. Nancy L. Kassebaum (R) of Kansas, recently wrote Defense Secretary Caspar W. Weinberger that the new warranty law ''will improve our defenses by ensuring our weapons work on the battlefield, gaining the most out of the taxpayer's dollar.''
The political tussle continues, but the Reagan administration is responding to congressional pressure.
Two-thirds of Navy procurement funds now include some kind of warranty in the contract, Adm. Steven A. White, chief of naval material, told the Senate Armed Services Committee recently. More than 500 Army contracts include warranties.
And the White House Office of Management and Budget (OMB) last week issued new restrictions on the use of noncompetitive procurements.
These are in response to President Reagan's memo to department heads last August citing the ''numerous examples of waste and exorbitant costs due to the lack of competition.''
Officials estimate that as much as 20 percent could be cut from procurement costs with true competition. The Pentagon accounts for some three-fourths of all the goods and services bought by the federal government ($170 billion annually) and has more than 4 million types of items in its inventory. Thus, most of these target savings are at the Defense Department.
Among those few cases where the requirement for competitive bids can be waived under the new OMB regulations are when only one source is available, when national security is at risk, or when international agreements mandate noncompetitive procurement.