Textron Delays Review Of Costs

Team Infidel

Forum Spin Doctor
Providence Journal
May 15, 2008 By Tony Capaccio, Bloomberg News
Textron Inc.’s Bell Helicopter unit has for the second time in nine months delayed a Pentagon review to see whether its system for tracking costs on major weapons programs is reliable.
The delay until at least August means the Pentagon will keep withholding part of its payments to Providence-based Textron on military orders. The amount withheld as of April 30 is $27.9 million, according to a spokeswoman for the U.S. Defense Contract Management Agency.
The Pentagon in September 2005 ruled that Fort Worth, Texas-based Bell’s system was unreliable and started withholding 2 percent of payments on its military aircraft programs. The amount was increased in 2006 to 5 percent. Major U.S. defense suppliers are required to track money spent on all major contracts through an “Earned Value Management System” against work performed so the Pentagon can spot problems before costs balloon.
A review set for August 2007 was delayed until March, and Textron in January requested another delay until August 2008, agency spokeswoman Ann Jensis-Dale said.
Bell requested the latest delay because it decided “further discussions were needed to clarify some issues before scheduling a review,” company spokesman Mike Cox said in an e-mail yesterday.
Bell, which accounted for about 30 percent of Textron’s sales in 2007, still has “high confidence in the reliability of our data,” Cox said.
Nick Schwellenbach, an investigator for the nonprofit watchdog group Program on Government Oversight, said withholding money sends a message to contractors. “After years of turning a blind eye, the Pentagon is finally enforcing its own rules for its contractors,” he said.
Textron stock rose 46 cents to $62.53 at at the close of trading on the New York Stock Exchange yesterday.