• $13.7 million in damage after L-3 mechanic didn't tighten nut
  • Incident illustrates Pentagon policy of assuming liability

L-3 Communications Holdings Inc. won’t have to pay for as much as $13.7 million in fire damage to an Air Force intelligence plane caused by a company mechanic who failed to tighten a loose nut in the plane’s oxygen system.

Air Force investigators tied the maintenance error to a rear-cabin fire during takeoff on an RC-135 Rivet Joint, a specialized electronics intelligence aircraft. No airmen were killed or seriously injured in the April accident at Offutt Air Force Base in Nebraska. L-3 initiated improvements in procedures and removed the mechanic from the program.

The incident illustrates a long-standing policy in which the Defense Department assumes liability for damages during operations and maintenance on the theory that contractors otherwise would pass along the costs of private insurance to cover mishaps. The risk is that contractors won’t have an incentive to prevent damaging mistakes, according to a leader of a watchdog group.

“I hope that the government records that kind of poor performance and considers that the next time a contract is awarded,” Scott Amey, general counsel for the Project on Government Oversight, said in an e-mail.

‘Cooperated Fully’

L-3 will be required to pay a $100,000 deductible under the “Ground Flight Risk Clause” that covers both ground and flight accidents with military aircraft. The company “has cooperated fully with the Air Force Air Combat Accident Investigation Board” and “we continue to work together to monitor safety and maintenance of the RC-135 fleet,” Jennifer Barton, a spokeswoman for the New York-based contractor, said in an e-mail.

The Pentagon’s acquisition rules require the Air Force to absorb any financial loss for accidents in all “but a limited number of exclusions” such as “willful misconduct or lack of good faith on the contractor’s managerial personnel, or loss sustained during unapproved flight,” Major Rob Leese, an Air Force spokesman, said in an e-mail. “None of those exclusions applied to this loss,” he said.

‘Prohibitively Expensive’

“Forcing contractors to assume liability for aircraft they are operating on under a Department of Defense contract would be prohibitively expensive,” Leese said. “It is much less expensive for the government to take the risk of having to pay for damage to the aircraft than paying billions of dollars for potentially no reason.”

Amey agreed that “the government seems to save a lot of money by self-insuring even with the occasional contractor screw-up,” but he said it nonetheless “seems like the government painted itself into a corner for every deal, even when large defense contractors could step up.”

Since 2002, L-3 has provided the RC-135 with depot maintenance including inspections, cleaning and re-installation of its oxygen system. The company last worked on the plane that had the fire in August 2013, according to Air Force accident investigators.

Track Record

The Greenville, Texas, facility where the aircraft was maintained “has a long track record of adhering to strict processes to ensure compliance with all” regulations and directives, Major General Thomas Bergeson, the head of Air Force congressional affairs, wrote Representative Jackie Speier of California in January.

Speier, the top Democrat on the House Armed Services Committee’s oversight panel, had pressed the Air Force to explain whether L-3 would pay for the damage. Bergeson wrote that L-3’s track record at Greenville is good and “does not indicate a lack of safety culture.”

The Air Force investigation board said in its report that the “preponderance of evidence” showed a “failure by L-3 Communications depot maintenance personnel to tighten a retaining nut connecting a metal oxygen tube to a junction fitting above the galley,” allowing oxygen to leak. The leak “created a highly flammable, oxygen-rich environment that ignited,” according to the report.

The Air Force originally calculated that the fire caused $62 million in damage, which was based on replacing all the specialized electronic equipment, Bergeson said. Depot teams determined that “the majority of the mission systems were not damaged beyond cosmetic smudging and discoloration,” he said.

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