McDonnell’s Chief Defends C-17 Program

McDonnell Douglas Chairman John McDonnell defended the company’s C-17 cargo jet program Wednesday during a closed-door hearing before a House subcommittee, asserting that the defense contractor is financially sound and installed new management at its Long Beach plant 18 months ago.

The House Defense Appropriations Subcommittee has posed one of the most serious obstacles to the future of the troubled program, which is more than a year behind schedule and about $1.2 billion over its budget. Subcommittee Chairman Rep. John Murtha (D-Penn.) said last month that he would support killing the program and that the nation could not afford the plane.

But Rep. Julian Dixon (D-Los Angeles), a subcommittee member, said in an interview after the hearing that he expects the subcommittee to approve funding to continue production and that Murtha has moderated his position on the program.

“He indicated today that he has taken another look at it and feels it is worth further consideration,” Dixon said. “He is skeptical, but he is not opposed to funding it.”

Murtha, whose public comments attacking the C-17 were atypical of his usual reticence on key defense programs, could not be reached for comment.

Dixon, a C-17 supporter, said the subcommittee called the hearing to examine whether McDonnell Douglas “has a new management team or whether that is just a smoke screen” and to address “concern about the firm’s stability and solvency.”

Dixon described John McDonnell’s testimony as candid, and he said the company chairman acknowledged that the firm had “made mistakes in the past.” McDonnell testified that the firm could withstand even the worst-case losses on the C-17 program and would require a $200-million write-off against profits if the Air Force rejects various claims filed by the company.