McDonnell Douglas Announces Refund Policy on Spare Parts
Aug. 02, 1985
ST. LOUIS (AP) _ If the Defense Department questions the cost of spare parts purchased from McDonnell Douglas Corp., it can return the merchandise for a full refund with ''no questions asked,'' the aerospace firm says.
That provision is part of a new McDonnell Douglas refund policy, which the company on Thursday called the ''most comprehensive'' in the industry involving parts sales to the U.S. government and foreign military customers.
The company said McDonnell Douglas Chairman Sanford N. McDonnell sent a letter on July 24 to Defense Secretary Casper W. Weinberger in which he said the federal government can return any covered spare part or piece of support equipment ''if there is any dissatisfaction with its cost - no questions asked.''
The policy, which McDonnell said went into effect on July 23, specifies that new and unused parts or equipment built by McDonnell Douglas and purchased from the company by the military under prime contracts may be returned within six months of delivery for refund if the customer is unhappy with the price.
McDonnell said a similar policy would be offered to the company's commercial customers.
Weinberger ordered Pentagon officials on July 23 to seek written refund guarantees from the nation's defense contractors for spare parts that are determined to be overpriced.
The new initiative was prompted by voluntary offers to establish such a policy from the General Electric Co. and the Boeing Co., Weinberger said, adding that the offers of both firms were accepted. The companies have pledged to provide the Pentagon full credit or refunds for any spare part they deliver that is determined to be unreasonably priced.
''Where instances of overpricing do occur, the Defense Department will act aggressively toward ensuring that it will pay fair value for each item and no more,'' Weinberger said.
At least one other defense contractor has developed a similar procedure. Although not cited in Weinberger's announcement, the Grumman Corp. has been following the same policy with the Navy since early this year.