European Stars and Stripes (Newspaper) - January 10, 1991, Darmstadt, Hesse                                / t thursday january 10, 1991 the stars and stripes Page 7 experts say axing Al 2 sends message St. Louis a cancellation of the Navy s Al 2 bomber program has sent a no nonsense message to the defense Industry where Cost overruns and delays have become a part of doing business analysts and defense experts agree. A. But the question is will defense Secretary Dick Cheney a surprising decision have any Long term Impact on the nations military Industrial Complex i think it will. 1 think companies will learn that they  sign dumb contracts and they  mislead the government a said Lawrence Korb a defense analyst for Brookings institution in Washington. _ the $52 billion a-l2 program was the largest weapons package Ever cancelled by the Pentagon. Its also one that everyone a Congress  an d Cheney himself a Felt was badly need sea the contractors St. Louis based Mcdonnell Douglas and general dynamics agreed in 1988 to develop the plane at the fixed Price of $4.8 billion. They were about $1 billion Over budget when Cheney pulled the plug. Authorities have said the contractors the Pentagon and Navy officials also attempted to hide some of the Large financial and engineering problems. That led to the resignation of the Admiral in charge and the Transfer of two other officers. It has also prompted a criminal investigation by the . Attorney s office in St. Louis. A Cheney was mad and he let the contractors know it a said Jay Kosminsky. An analyst with the heritage foundation in Washington. A this is his Way of letting them know that when he asks for a straight answer he expects  the message is if you say you re going to design the plane for $4.8 billion then do it. And if it s not possible it. If you think you can of Pioneer something on a fixed budget you re basically lying to yourself Quot a Wolfgang Demisch done to try to cover it up Kosminsky said. How Long that will last is anybody a guess he said. A this is an Issue that different people have been trying to work on for years. So who knows How effective this will be a Kosminsky said. On tuesday the Pentagon said that it would try to regain $l9 billion paid to the two contractors for goods and services not yet delivered. Both companies have said they would fight that Effort. Neither company has been put into financial  by. By the cancellation but both began major layoffs. Stock prices of the two firms took  on w All Street Mcdonnell Douglas on t tuesday Tell $7,50, to. $31,25 in trading of new York Stock Exchange issues general dynamics w As Ott $2.50 at $22.50. The a-12, nicknamed the Avenger was intended to be a highly sophisticated Carrier based Quot bomber that would replace the Navy s 1950s-Era a a intruder. Sittne Industry analysts have been critical of the fixed Price method of developing new weapons. They claim its unfair to ask a contractor to Home up with new designs on a budget a it s like Sayi Jig. A if you think you can Pioneer something on a fixed budget you re basically lying to yourself Quot said Wolfgang Demisch an analyst for us securities in new York. Until now the development of the plane or tank or submarine always came first and the., fixed Price More than Likely became a Restuc turd and. Flexible Price analysts said. A a a a a a a. _ now those Days maybe Over. A a there a some question As to How serious the contractors and the Navy were about the fixed Price a said Steve Kosiak a analyst with the Washington based Center for defense information. Quot you no longer can say. Done to worry about the fixed Price because they ii bail us out they always . Officials say Neil Bush should shun Bank jobs until he understands Law washing 1�?Ton by i i Vloice ment officials at the Olifice of Elluitt supervision recommended 1 us Day that Neil m. Bush the presidents son be barred from working at any Bank of other institution that received Federal insurance until he showed that he understood conflicts of interest. Last month an Ludge assailed Bush Lor what he called a conflicts of interest and a unsafe and unsound practices when he was a director of Silverado banking savings and loan association in Denver. The institutions failure in 1988 has been attributed in part to unpaid Loans administrative Law Neil Bush a it flood of business a Boater Jack Bryan checks a friends Mississippi River which feeds the Lake flood surrounded store on Tunica Cut was expected to Crest at 36.3 feet thurs off Lake in Mississippi but there a no Day. The nearby town of Tunica is 35 word on whether any bait is left. The Miles Southwest of Memphis Tenn. Secured by Bush to two associates. Bush has denied wrongdoing and has said he would Appeal the ruling. T he judge Daniel j. Davidson recommended the Mildest disciplinary action that could be imposed. He recommended that Bush be ordered to make full disclosures about his other business ventures in future dealings with federally insured institutions and to uphold his responsibilities to depositors and shareholders. A. This is what is called a a cease and desist order. T he matter . Under consideration before w. 1 Timothy Ryan jr., director of the Oil ice of limit a a a supervision which regulates savings and loan institutions. I Leas expected to make a decision within three months. James , Bush s lawyer said tuesdays action was an attempt to get Ryan to make a ruling that Davidson had denied a a. A they asked Lor the same thing i Tom tin judge and they did not get it Quot he said in a recommendation filed tuesday with the of i ice of t Hilt supervision lawyers for the Agency asked that Bush be prohibited from serving As an Olfier of any federally insured institution until Quot he knows How to respond appropriately to an actual and potential font list of  a Bush May demonstrate such ability by reference to actual conduct by successful completion of appropriate formal Cauca Tion or by similar Means a the Leepom memo Datum said. A a a a the administrative proceeding is Sepa. Rate from a $200 million lawsuit tiled by Federal Deposit insurance corp. Against Bush and other former directors and Olli ears of Silverado. A. A trial in that Case is scheduled for october. Bush has sought to dismiss the Case contending that Federal regulators approved All the transactions he voted on As a  Island insurance firm ordered closed Providence r e up a policyholders at the american Universal insurance co., once the fifth largest property and casualty insurance company in the state will have to find new coverage fast. Superior court judge Robert Krause placed american Universal in receivership monday. He ruled that it would be a a derelict to allow the firm to a continue to Careen in a foreordained orbit of self destruction while. Wasting its assets.�?�. Nancy Mayer chief Legal counsel to the department of business regulation de told radio station pro am that american Universal policyholders will have to find new insurance w within a month. She said claims of up to $300,000 would be honoured during that period. The receiver that is appointed by the court will sell off american Universal a assets she said. She could not he reached for further comment. Marsha Wheaton vice president for human resources. At the insurance company said she was unsure whether american Universal has any recourse to Krause s Rul ing. She said Rhode islanders will apparently be subject to 30-Day notification that their insurance is being  in other states however May get More or less w Arning. Wheaton referred further comment to a company lawyer who w As not available. American Universal dealt in Homeowner commercial and Auto insurance. It has 26.000 policyholders in Rhode Island and 110,000 nationwide. Last month Krause ordered the company not to Wiite new policies or rewrite old ones. He acted at the request of the state. American Universal was trying to stave off receivership by courting a new buyer. But the Der rejected All buyers the company proposed claiming they did not have sufficient funds to Rescue american Universal. American Universal a financial difficulties partly Stem from risky investments made by g. Wayne Reeder who gained control of the company in 19kk, and Charles s. Christopher whom Reeder installed As president. Christopher was ousted in september 1988. Many of the $28 million in investments  Are under investigation by the . Justice department