Financial Responsibility for the C-5A Wing Modification

GAO discussed whether the Air Force was correct in concluding that the Lockheed-Georgia Company was not legally responsible for correcting a design defect in the wings of a shipment of C-5A aircraft. The Air Force had determined that correction of the defect would essentially entail rebuilding the wing. Since Lockheed and the Air Force had entered into a supplemental agreement to restructure the obligations in the original contract, the Air Force noted that Lockheed was not legally obligated to rebuild the wings without fee. The Air Force subsequently awarded Lockheed a new contract to rebuild the wings. GAO believes that, although the Air Force should have urged Lockheed to correct the problem before it entered into a new manufacturing contract, the obligations of the supplemental contract require that payment to Lockheed be made.