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THE PENTAGONISTS -- AN INSIDER'S VIEW OF WASTE, MISMANAGEMENT, AND FRAUD IN DEFENSE SPENDING

11. Poor Richard's Network

CONGRESS, STUNG AT LAST, tried to slow the Reagan Pentagon's spending orgy by means of the Freeze. It was a little more than a tut-tut, a little less than a pair of handcuffs. Someday, when the fiscal history of the nation in the twentieth century is written, there will be one page for the half-courage of Congress in the mid-1980s, which tried for a moment to stem the Republic's slide toward bankruptcy.

The Freeze was the brainchild of Senator Charles Grassley and his assistant Kris Kolesnik. Some members of Congress found it easy to put on a show of clucking over a $500 cotter pin, but many of them just walked away after the show was over. Grassley listened to us, and listened hard. He absorbed the lessons about our effort to make separate but related drives against the various elements of overcast, that is, labor, material, overhead, and so forth. He was especially concerned with our work measurement initiative for its usefulness in depicting factory incompetence, gauging management efficiency, and indicating cures.

He summarized all this in his June 25, 1986, letter to President Reagan:

Fitzgerald and his associate, Dr. Thomas Amlie, helped me and the Senate Budget Committee that year (1983) to understand the extent of the spare parts problem and its impact on the rest of the budget. It has become clear since then that the overpriced spare parts phenomenon is a symptom of an overpricing policy in general in the defense weapons business.

Grassley also noted the costly problems of factory inefficiency and ended with this delicate expression about the Freeze -- that the Senate, after a two-year fight, had set a budget in 1985 that "did not create further disincentives to efficient weapons pricing." That is, the Senate had removed some of the money that the Pentagon would have felt obligated to waste.

Senator Grassley recognized the value of true competition both as a spur to cutting costs and improving quality and as a means of limiting opportunities for bid rigging. Advertised solicitations and sealed-bid responses were used for only about 6 percent of the Pentagon's acquisition dollars. The rest was sole source, "competitive negotiations" (lodge brothers only), and "follow-on to competition" (sole source, too). Beginning in 1983, Grassley introduced a series of bills that he called "Creeping Capitalism." The first of these bills required an increase of 5 percent per year in the Pentagon's competitive procurement until true competition reached 70 percent of the total contract dollars spent.

By moderating the bureaucratic necessity to shovel out the money before the end of the year and by putting a little downward pressure on weapons prices, we hoped to rally all true hawks around the Freeze flag. After all, wasn't it better to have in the arsenal more weapons that work than to have fatter and fatter generals and defense contractors? But the race of true hawks either had been corrupted by the pork barrel or had died out. They simply didn't show up at the antiwaste rally.

A notable nonshow was Verne Orr, whose oratorical war against high costs was over: high costs had won. Verne had surrendered. Now it was entirely up to a few tightwad members of congress like Grassley. In early 1985, when he began to work on the FY 1986 budget, Grassley tried unsuccessfully to get the usual update on work-measurement information from Orr's office. The office of the secretary of defense had not been forthcoming, either.

So Grassley wrote directly to me and, working with Carver's principal deputy, Richard Harshman, and the Air Staff's chief financial lobbyist, Duff Young, we prepared to furnish the information. The three of us planned to meet with Kolesnik in Harshman's office to go over the details. At the last minute Carver got wind of the meeting and moved it to his office, where he took charge and declared that Grassley was not to get the information.

Kris wanted the denial directly from Orr; Carver said that could be arranged, but not with Kolesnik present. Carver disappeared for a few minutes and came back with an oral reply from Verne Orr: no work measurement information for Congress.

As he'd proved before with his subpoena invasion, Charles Grassley was not a timid man. He -- in alliance with Representative Barbara Boxer -- decided to pass a law to get the weapon systems cost data he wanted.

In due course, after some interesting congressional battles, the Grassley-Boxer bill was enacted in 1985. The law, which was known in my circles as the Richard E. Carver Memorial Cost Data Act, came as a big shock in a lot of contractors' board rooms, at lobbyists' cocktail parties, and to their Pentagon lodge brothers.

From time to time, in the early days, I'd been praised for my labors in getting a useful system of work measurement, but that was because I seemed to be a good public relations symbol. Once it was clear that I and my office wanted a real knife (work measurement) that made real slices and drew real blood, things changed.

The Troika -- our name for the unholy alliance of the Air Force procurement people, the office of the secretary of defense, and the industry associations -- had to put a stopper on Grassley-Boxer. They picked Maryanne Gileece, Eleanor Spector, and Richard Stimson from the secretary's office to do the infighting.

Gileece and her team didn't know much about work measurement, but they did know the right buttons to push in Congress -- or so they thought. There had been a time when an authoritative letter from Gileece would have cowed the pliant Armed Services Committee. But, though the Troika didn't realize it, they were dealing with a new, tougher breed on the Hill. Tougher and more honest. Donna Martin, for one, had made a difference when she left her job as assistant to Dina Rasor at PMP to work on military issues for Representative Barbara Boxer. Donna's PMP experience had toughened her outlook and given her good insights into how the Pentagon acquisition system worked.

At this point it came down to a duel, if David's little episode with Goliath could be called a duel. The Armed Services Committee staff had seen the wild discrepancy between our documentation and what the Troika was trying to sell. So they arranged a debate in the committee's staff room to clear matters up. Goliath had the bulk: all the resources of the office of the secretary of defense, the vast research facilities of the big contractors, and plenty of tame academics. The Attic Fanatics had one pebble of truth and an old, much-battered engineer to sling it.

At the appointed time, I appeared at the Armed Services Committee forum, but Goliath didn't show up. Needless to say, my side took advantage of the chance to educate the assembly.

Meanwhile, Richard Carver was stealthily doing what couldn't be done in open debate; he used the bureaucratic mechanism to disarm us by sending us a lot of busywork assignments. He made a pact with General Larry Skantze, head of the Air Force Systems Command, to impede us. And he began to dismantle my hard-won jurisdiction awarded by the courts.

At one time I'd delegated part of my work measurement responsibilities to the AFSC, and now I wanted it back, simply because my flow of information on the subject had been narrowed to the trickle I got from closet patriots. General Robert Reed, to whom I'd sent my request, quietly got together with Carver, and the two of them decided to tell the military staff and field commands to disregard me. When this was revealed later by John Dingell's investigators, I faced Carver and asked him how he could so easily overlook my court-ordered contract.

It was simple. "Your court order only says that you can give guidance and direction," he said. "It doesn't mean that anybody has to follow it."

On September 9, 1985, Carver and I were invited to testify before Senator Proxmire's subcommittee. Without giving me any notice, Carver used the occasion to announce a sharp reduction of my authority. I had been the person in charge of work-measurement matters at the highest level in the Air Force; now I was to be no more than a staff adviser on the subject.

Even at that, there were still some painful things for the big contractors that Grassley-Boxer had made into law. The provisions for ready availability of figures and, more particularly, for comparisons of should-take hours times with actual times was a nagging headache for the acquisition community, both sellers and buyers. They regarded it with the affection of a bank robber for a closed-circuit television pointed in his direction.

Grassley-Boxer had to go. General Skantze, engines roaring, made the first bombing run at a meeting of the Aerospace Education Foundation Roundtable on August 15, 1985. As the November, 1985, Air Force Magazine reported:

"Sometimes it is an arcane feature of the acquisition rules that leads to misunderstanding and the loss of public confidence. For example, a statutory provision new this year -- use of a 'standard work hour' in billing labor costs -- seems almost certain to generate the sort of misinterpretation that has so often enraged the taxpayers."

General Skantze pronounced it (the Grassley-Boxer approach) "an enormous club with which we can be beaten continuously."

"Very few people on the Hill really understand what a standard hour is and how you arrive at it," he said. "It is the calculation made by an industrial engineer who picks out a point in the production cycle where changes have slowed down, where there's stability in a design, and where the people are trained." He says that "under these ideal circumstances (a given job) should take a number of hours."

"Used properly, the standard hour is a handy tool for estimating and pricing. Applied as an absolute yardstick at the beginning of production, though, it may be off by a factor of five or ten," General Skantze said.

"So someone will take that data, as they have over the past six months, and say that the industry is only one-third or one-tenth as efficient as it should be and that they're wasting all the taxpayers' money," Skantze said. "We're going to have a terrible problem with this because we've got to provide the data, and it will be interpreted by those people who want to use it for their own purposes."

Among Skantze's various misunderstandings, he clearly didn't comprehend that our "fair day's work" approach called for setting attainable times reflecting current, not ideal, conditions and methods. His eccentric address proved again that the Troika was desperate to avoid legitimate reporting: "We're going to have a terrible problem with this because we've got to provide the data."

Apparently the Troika couldn't find an independent professional industrial engineer to defend their view; at least they never came up with one. Their usual spokesman was a procurement functionary with obvious conflicts of interest, so we had no trouble busting their balloons.

In trouble, the Troika turned to high-tech conspiracy. They went to an enterprise called the American Productivity Center (APC) in Houston, Texas. That optimistic name made my heart soften -- until I saw the list of advisers, sponsors, members, and sustaining members: Boeing, General Dynamics, Lockheed, Northrop, McDonnell-Douglas, Rockwell, TRW, et al., along with their Big Eight certified public accountants and the bosses of big defense-industry unions.

APC set up a "Defense Industry Productivity/Quality" computer message network, which began an attack on the hated Grassley-Boxer law. Computer conferencing is obviously the late-twentieth-century substitute for secret messages left in a hollow tree.

As might be expected in the committee culture of big business, the network had a moderator, whose stated role was to "help set the initial agenda for discussion, to guide and direct the discussion as it moves along, to make 'weaving' and 'summarizing' comments, to synthesize thoughts, to stimulate the group, and to remind them of priorities." He was Dr. Richard Stimson of the office of the secretary of defense, code name "Poor Richard," code number 2103. (Benjamin Franklin) the original Poor Richard, said in his Almanack, "A penny saved is twopence clear.")

As the Troika was beginning to find out, Congress had changed from the good old days of Mendel Rivers and his ilk. The House Armed Services Committee, long known as a money shop for the Pentagon, was under new management. Les Aspin, an intelligent, energetic, and ambitious congressman, had succeeded Mel Price as chairman -- just in time to be faced with a snakepit of horror stories too fearsome for even the old committee to explain away.

Aspin set up a special subcommittee on procurement policy, headed by Congressman Nick Mavroules of Massachusetts. On it he put, as ad hoc members, some of the most caustic critics of Pentagon boondoggling in Congress, including Barbara Boxer. Mavroules, with consent from Grassley and Boxer, offered to mediate the dispute over their law.

Step one was public hearings in April 1986 at which Senator Grassley, Ompal Chauhan, and I were invited to testify in favor of work measurement. The opposition witnesses were some titans of industry and Assistant Secretary of Defense Jim Wade. Through Kolesnik's good offices, I'd previously had a meeting with acquisition czar Wade, and we'd actually persuaded him to agree to some of our technical positions. In the hearing he announced his modest concessions and tried to avoid the hazards of work measurement. The titans just mumbled. We scored a no-hitter against them.

The titans of industry tried again. They got Mavroules to set up a meeting in his office with Grassley, Boxer, and me in the lineup against various Daddy Warbucks types. The result was an impasse. In the spirit of fair play, Mavroules did agree to more attempts at mediation; he appointed Rudy DeLeon, one of the committee's most competent staff assistants, as mediator to try to clarify provisions the Troika representatives said they didn't understand. But it was like dealing with the old Russians; the other side wanted to get but not give. Each time Grassley and Boxer made concessions, they were faced with bigger demands from the Warbucks side.

Then, making their move in Congress to strike down Grassley-Boxer, the Troika committed some dire mistakes. To lead the fight, they picked Republican Representative Jim Courter and Senator Dan Quayle. Neither had substantive knowledge of the issue. Courter had been a member, albeit a somewhat suspect member, of the Military Reform Caucus on Capitol Hill. He had shown considerable reluctance to hurt the feelings of the big contractors. And he didn't know much about work measurement. With Quayle and Courter as point men, the Troika decided to push for a repeal of Grassley-Boxer.

Donna Martin was crushed. She had worked hard and in good faith to negotiate a compromise solution, and now she had been double-crossed by the move to repeal. But as she mournfully gave me this news on the phone, I could hear Barbara Boxer, a small woman blessed with a powerful voice, in the background. She was denouncing her opponents, swearing to fight them on the floor of the House and suggesting some rude violations of their persons.

Grassley's reaction was more measured but equally determined. In a floor speech on the double-cross, he said that industry was trying to "shut all the windows we opened last year on defense factory inefficiency, on huge defense contractor rates, and on excessive costs for defense weapons." He knew why the repeal effort had been launched: "Open windows reveal a lot of embarrassing activity." And Kris Kolesnik gave a hint of Grassley's strategy to Aerospace Daily when he told it, "This has the potential to hold up a conference agreement on the defense bill."

Actually, the double-cross was good news for us. Our side, with nothing to offer in the way of campaign contributions or jobs, was bound to lose in backroom "mediation" dealings. But in an open floor fight Grassley and Boxer had the better of the argument.

The traffic on Poor Richard's ironically named productivity-quality network became more urgent. Some of the addressees in the network, unsympathetic to the Warbucks cause, were keeping us informed. On July 1, 1986, Richard Engwall, a Westinghouse official, sounded the alarm:

SUBJECT: Grassley-Boxer -- Shift on Work Measurement. Please find attached article in June 27, 1986 Aerospace Daily of Grassley, Boxer Shift on Work Measurement. Pat Sullivan, AIA (Aerospace Industries Association), has asked me to help defuse this activity. Please contact your Senator/Congressperson of your views and/or help furnish our White Paper On Work Measurement/Cost and Price Management Interrelationships as requested in my letter of June 10, 1986.

The message went on to mention the aborted compromise attempt and said that Courter's attempt to repeal Grassley-Boxer "has backfired on us." It continued:

Rep. Boxer has withdrawn any support for compromising and is planning to take the legislation back to the full house for a "repeal/no repeal vote." We need to communicate to all of our individual congresspersons of our concern for the cost and price management legislation being implemented as stands, and urge repeal. We were and still are willing to insert language similar to that submitted to James Wade, 30 January 1986. We have an apparent tough job ahead of us. I welcome your ideas and comments.

Engwall's network message also went to Pat Sullivan of AIA, to its "Productivity Committee," and to the "15-80 work group" of CODSIA, and it was helpful for us to know what these powerful lobbies were up to. We also got information from industrial engineers at various contracting companies. As a sidelight, it was fascinating to see Representative Courter, who was being educated about work management by the Sperry Corporation repeat his well-memorized lessons in his speeches. Sperry later merged into Unisys Corporation, which became a prime investigative target.

Grassley and Boxer let the industry partisans in Congress have their fun in repealing Grassley-Boxer 1. Then Representative Boxer offered a measure almost identical to the one repealed except for clarifying language. Boxer's restoration was passed overwhelmingly by the House. In the next move, she and the senator used all their leverage to see that Grassley-Boxer II stayed in the Defense Authorization Bill in conference with the Senate.

***

During the Freeze period Congress did some good work in digging into the acquisitions mess. One who sort of sidled into the fray was Representative John Dingell, known as "the Truck." As chairman of the formidable Energy and Commerce Committee and the tough Oversight and Investigations Subcommittee, with the biggest budget and the broadest jurisdiction in Congress, except for the appropriations committees, Dingell was a very large truck indeed. If some matter of interest didn't fall into the category of either energy or commerce, it very likely fell under the jurisdiction of one of the regulatory agencies, which Dingell also oversaw.

One of those regulatory agencies was the Securities and Exchange Commission, so no eyebrows had been raised in May 1984, when Dingell asked Verne Orr to permit me and my two assistants to give the Oversight and Investigations Subcommittee some part-time help in "an SEC matter."

The matter he had in mind was the still-gestating General Dynamics scandal. Orr didn't know that, though, and he was very happy to divert the Attic Fanatics to any seemingly harmless activity. The broad story of that scandal has been amply chronicled elsewhere. But some of the lesser-known aspects still stick disagreeably in my mind.

Pete Stockton led the charge for Dingell. Soon after the start of the investigation, he confided to me that General Dynamics officials had told Dingell that if we persisted, we would hurt some people we liked and admired. That had no effect on either the congressman or Stockton, but we shortly found out what they meant.

The company officials made it very easy for us to find records of thousands of dollars' worth of gifts and favors they had bestowed on Admiral Hyman Rickover. The sharp-tongued old admiral had his faults, as we knew, but they were outweighed by his readiness to denounce ripoffs by the big contractors and the seriousness with which his pronouncements were received on Capitol Hill.

Slowly, methodically, patiently, General Dynamics wove a trap for the admiral. Rickover used to make frequent trips to the company's Electric Boat shipyard in New London, Connecticut, to check on the construction progress of "his" nuclear submarines. He was present at launches, and he went on shakedown cruises. General Dynamics saw to it that he lacked for nothing on these visits. He didn't have to bring as much as a toothbrush or an extra shirt on a shakedown cruise. At a launching, where gifts to dignitaries are the custom, there was always some expensive bauble for his wife. (Two gifts of jewelry for Mrs. Rickover were shown in the General Dynamics accounts as "10 retirement watches.")

In Rickover's case the General Dynamics accountants kept marvelous records. They might not know exactly what they were spending on multimillion-dollar submarines, but they knew to the last cent how much they had spent on Rickover's toothbrushes. They hoarded all those little expense vouchers for twenty years, but somehow managed to have almost no records at all on other high-ranking government officials. These expense vouchers were, for the most part, blank.

The discovery of the Rickover records came as a hard blow to me. For years, as I rode the shuttle bus between the Pentagon and Capitol Hill, I'd had time for a few minutes of reflection. Some of my greatest highs and lows of spirit had come then. The bus ride back after Stockton showed me the Rickover records was one of my lowest points.

Before the subcommittee hearings on General Dynamics began, Secretary of the Navy John Lehman made a desperate attempt to change the focus from the great and grave accusations against General Dynamics to Rickover's acceptance of gifts. It didn't work, and Dingell wrote Lehman a blistering letter telling him just why it wouldn't work. Without condoning the admiral's faults, Dingell refused to be sidetracked.

The investigation pressed on. Dingell and Mike Barrett, the subcommittee's staff director and counsel, drafted some good auditors and investigators from GAO. Once free of the stifling GAO hierarchy, such men as Bruce Chafin and Art Brouk did first-rate service.

They also brought in George Spanton, now retired from the DCAA but still involved in the special counsel's investigation of his ordeal. When Chip Terrill came up with evidence that Weinberger and his assistant, Vince Puritano, were implicated in the plot against Spanton, the special counsel choked, took a wrong turn legally, and eventually lost the case in court.

The key witness in the General Dynamics investigation never appeared in court. He was P. Takis Veliotis, a former executive vice president of the company who was by then a fugitive from justice. Faced with imminent indictments on the charge that he had taken kickbacks from subcontractors, he had fled to Greece, his native land, taking along a lot of evidence about other General Dynamics executives.

Veliotis didn't understand the American system of justice -- I mean the one practiced by our Justice Department. He naively thought that the department would be so eager to get incriminating evidence on the other General Dynamics suspects that they would let him plea-bargain for a reduced sentence. He didn't understand that the last thing the Reagan Justice Department wanted to do (especially with Ed Meese in charge, toward the end) was prosecute the highest officials of our largest defense contractor.

When he got no response from Justice, Veliotis began to leak information to Stockton and Pat Tyler, a Washington Post reporter. At this time Dingell was under heavy pressure not to proceed with his hearings, but when Stockton shrewdly disseminated tidbits from his hoard of evidence, the media took such an interest that Dingell was able to fend off the political pressures.

His first General Dynamics hearing, on February 28, 1985, brought out the largest and most diverse group of print and electronic media reporters I've ever seen at a military procurement scandal hearing. At one point I counted thirty television cameras in the hearing room.

Dingell's staff had done a superb job of preparation; the committee congressmen -- especially three young Democrats, John Bryant of Texas, Gerry Sikorski of Minnesota, and Ron Wyden of Oregon -- were raring to get started. Sikorski led off with an eloquent statement about "the charmed life of General Dynamics":

Who else can record the largest loss in history, over five billion for tax purposes, at the same time record a two-billion-dollar profit for SEC purposes, and still pay no federal income taxes since 1972?

Who else can buy in on a major defense contract, do a miserable job of managing the construction of the weapons system, overrun fixed-price contracts by one billion dollars, be willing to settle a claim against the government for one hundred and fifty million dollars, and later receive close to one billion dollars in taxpayers' money?

Who else could use non-conforming steel in a submarine, foul up the welding program, suffer a total collapse of its quality control program, make a preposterous claim against the Navy insurance process, and then obtain another government bail-out?

What small contractor could suffer the wrath of the Secretary of the Navy, go to the White House and meet with Mr. Meese, then have a pleasant meeting with the Secretary of the Navy that results in the Assistant Secretary running out to your corporate limousine like a puppy dog to assure you that the Navy will take care of you? And where else can that Assistant Secretary get hired eighteen months later as an executive vice president? Mr. Chairman, the questions continue.

Chairman of the Board David S. Lewis and Executive Vice President Gorden MacDonald could see they were in for a rough day. They had to listen to P. Takis Veliotis's tape recordings of General Dynamics executives plotting to conceal cost overruns caused by their own inefficiency so that the charges could later be attributed to changed requirements from the Navy. Dingell and other subcommittee members grilled them mercilessly on that.

They had to listen to the live testimony of their former vice president, who testified that those same overruns were indeed caused by General Dynamics' bad management and ineptitude.

They had to endure allegations that Lester Crown, a director and the son of their beloved former chairman of the board, had admitted to involvement in a bribery scheme and that he had been given a Top Secret clearance afterward. (As stated in a February 7, 1985, letter from Dingell to Weinberger, Crown had bribed certain Illinois legislators with $15 thousand of his own money -- he'd then had a wholly owned subsidiary falsify its books to reimburse him.)

General Dynamics put up a rickety defense, mostly by attacking Veliotis. MacDonald and a couple of his flacks, F. Bettinger and R. Duesenberg, had tape-recorded their conversation with Pat Tyler on the proposed strategy. When MacDonald, under oath, had to admit the taping, he was forced to produce the tape. Duesenberg said to Tyler:

Pat, that guy began to steal, Veliotis, almost immediately upon coming aboard began to set up the scheme by which he stole from this company. So you know what the guy was doing, was just carrying out his sordid criminal instincts by creating Pearl Harbor files that he may hopefully, from his point of view, use sometime down the line. Because as he's stealing this money, along with his colleague, Jim Gilliland, he has to have in mind that somewhere he may be caught, and that's exactly what happened.

Luckily for General Dynamics, the Justice Department was the evaluator of many of the heavy-duty charges, so the company was able to slither out from under them. When it came to human-scale offenses that the ordinary taxpayer could judge, they were not so lucky. The expense vouchers turned up by the investigators were plentiful and outrageous. There was the $18,650 bill from the Old Warson Country Club in St. Louis, $17,000 of it for executive James Mellor's initiation fee and $1,650 for the club's "debt conversion note."

Crown, Duesenberg, Lewis, and E. J. Lefevre ran up hefty hotel bills at nice resorts. Former Navy Assistant Secretary G. A. Sawyer, who had run after the corporate limousine like a puppy dog, relaxed in equal splendor. General Larry Skantze and many others were entertained at the Annual Wallow of the Military Order of the Carabao (water buffalo). General Dynamics spent and the Pentagon paid. Out of the defense budget. (Take that, Evil Empire!)

John Dingell's favorite infamy was the expense account of General Dynamics' Dr. A. M. Lovelace and wife. Their expenses were charged to the common overhead expense pool, of which the taxpayers paid 94 percent. Dingell read aloud, "Fursten, boarding at Silver Maple Farm, $87.25." "Who is Fursten?" he asked. Fursten was a dog. When Dr. and Mrs. Lovelace took luxury trips at the taxpayers' expense, Fursten lived in canine bliss at $25.26 a day. That was more than I received in expense reimbursement when I stayed on military bases on government business trips.

Question: of the numerous sordid examples of big-time larceny and of moral and legal failure in the General Dynamics scandal, which one caught the attention of the press? Fursten, of course. The subcommittee office was overwhelmed with requests for vouchers showing his board bill. Fursten was probably the least expensive General Dynamics executive feeding at the public trough, but his case was one that people could understand.

When the case against the company had been well-displayed in all its ugly details, the Pentagon damage-control PR crew went into action. Their party line read this way: yes, General Dynamics is much to blame, but this is a unique case, an aberration. We don't know of anything else like it.

Dingell wanted to shoot this down quickly, so he called another round of hearings for April 23 and 24, 1985. At this point Weinberger announced that he was going to try to recover $244 million in excessive overhead charges from General Dynamics. Dingell was unimpressed. In his opening statement at the April 23 hearing, he said:

In announcing his actions to recover two hundred and forty-four million dollars from General Dynamics ... Secretary of Defense Weinberger claimed that General Dynamics was an aberration. Today and tomorrow, the subcommittee will expect to hear testimony and see evidence that, far from being an aberration, the company was just one of the gang. False reports and false claims, incomplete records, and an unfortunate attitude of "catch me if you can" seem to be standard operating procedures for major defense contractors. The cost of these things to the taxpayers is, of course, immense.

Several days after the committee disclosed that the government was paying for obviously unallowable overhead expenses, including the boarding of this country's most famous dog, Fursten, Secretary Weinberger announced his get-tough policy. His first action was to require all defense contractors to submit certification, under penalty of perjury, of the propriety of overhead charges at various steps.

When major defense contractors complained, the Department of Defense general counsel advised them that the Pentagon was not really considering criminally prosecuting fraudulent certifications. They continued to complain, so a deputy undersecretary further softened the blow: the contractors would have to certify their overhead charges only at the final settlement, thus eliminating any benefit to the taxpayers of the certification requirement.

Pratt and Whitney was the star attraction at the April hearings. George Spanton, the principal witness, had worked closely with FBI Special Agent James Cavanaugh of the bureau's Miami office on the FBI's investigation of Pratt and Whitney. When Stockton went to see him, Cavanaugh was frustrated over what seemed to be Justice Department moves to ensure that Pratt and Whitney would not be prosecuted effectively. This, along with other devious behavior by the department, convinced Dingell and company that the fix, if not already in, was en route.

Spanton did his usual, calm, meticulous, and devastating job of explaining how Pratt and Whitney unloaded huge entertainment bills for their executives and Pentagon lodge brothers onto the taxpayers. Dingell and company went through the whole grand swindle. There was the $67,500 company contribution to Air Force General J. T. Edwards's wife's art club. And the $53,268 bash at the posh Breakers Hotel in Palm Beach; the $10,220 for fancy gift pen and pencil sets; $3,231 for a gathering at the King David Hotel in Jerusalem; $9,100 for Navy baseball caps (top brass got gold scrambled eggs, middle brass got silver, and the hired help plain cloth); $43,672 for an outing at the PGA Sheraton Golf Resort in Palm Beach; $7,085 just for hors d'oeuvres at the same resort; $4,596 to pay for a seminar for executive wives -- the bills went on and on endlessly. Pratt and Whitney showed a touching love of hearts and flowers: $813 for corsages at the Fighter Fling Ball and $2,735 for strolling musicians at another party.

The company didn't forget charities to needy politicians who could help out. Candidates for the Florida legislature, the local sheriff, the local supervisor of elections, the Palm Beach County Commission, the county school board -- all of them went away happy. And you and I paid the bill.

Spanton testified that these corporate thieves even billed the government twice for many of these expenses. Over the years, he said, Pratt and Whitney "duplicated two million, nine hundred thousand dollars in various general and administrative expenses." When caught, the company had paid the money back. When George asked for an investigation of this fraud, the DCAA doctored his report, trying to reduce its impact, then passed it on with his original signature.

What did the hearings accomplish? They probably ensured the success of the legislators' "constant dollar freeze" on the Pentagon, and they were the high point of congressional resistance to Reagan's profligate spending.

Enough was enough, though. The administration wasn't going to take any more of this exposure to the cold winds blowing on the Hill. It refused to let FBI Special Agent Cavanaugh testify, on the excuse that it had reopened Cavanaugh's investigation of Pratt and Whitney, which was therefore "ongoing." (Actually, no new investigation took place.)

In addition, the Air Force refused to clear my statement -- about how the Pentagon's audit and investigative organizations performed in internally controversial situations -- for open publication. The Air Force's final verdict was that I could testify at Dingell's hearing but that any testimony I gave about my first-hand experience wouldn't be cleared except "for security purposes." This again left me vulnerable to the private damage suits Chip Terrill had warned me about, so I did not testify.

A good thing, too. Later investigation by Dingell's staff showed that my bosses were just waiting for me to slip up. The Air Force general counsel and several subcontractors discussed how Pratt and Whitney could sue Colin Parfitt and me for releasing Pratt's formulas for pricing spare parts and engines. We didn't release the formulas, but Senator Proxmire did. The Pentagon plotters had no stomach for taking him on, however.

Other traps were set (several are outlined in Major Jim Wolfe's diary of events during the period). I managed to avoid any misstep, but once again the administration, both in my case and in Cavanaugh's, had denied Congress information and had gotten away with it.

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