GETTING A CALL FROM THE Department of Defense was a shocker for Merlin Hanson, who never dreamed he would benefit from the recent scandal over spare parts.
Hanson, president of Weldun International Inc., a small tool-and-die company, gave up trying to do business with the government about two years ago. But when he picked up the telephone one day in August, an eager procurement officer was on the other end. "He indicated that he would give us opportunities that we were never able to get before," says Hanson.
Those opportunities are an untold part of the fallout from the recent spare-parts controversy, during which the big defense contractors were chastised for overcharging. Congress has passed legislation that calls on the Pentagon to make procurement more competitive. The Pentagon, in turn, is pressuring the defense contractors, which are voluntarily turning over the parts to the government for outside sourcing. Grumman Corp., for example, has relinquished about 7,000 parts in the past year."It's not worth the trouble for us," says John Carr, vice-chairman. "But a small shop should be able to provide the parts at a lesser price and still make a profit. They don't have our overhead."
The "breakout" parts -- so called because they are broken away from the prime contractors -- could become a big chunk of the $22-billion spareparts industry. "We're already seeing more of the breakout items," says Jon Williams, president of Aero Components Co., an aircraft-parts maker. "It should keep steadily increasing."
But observers question whether small companies are prepared to profit from the windfall. Some may be intimidated by the government bureaucracy. And the spare parts, many of which are for older weapons systems, could prove expensive to make. "Most of the parts don't fit into the modern computer-controlled manufacturing processes," says one manufacturer. "We've got to get enough dollars to make it worthwhile."