Despite a green light from the Supreme Court for sanctions against violators of its wage-price guildelines, the Carter administration indicated uesterday it will use the penalties causetionsly -- and in some cases not all.
While claiming legal vindication for the program, officials conceded critical national security or energy needs my force the government to award lucrative contracts to guideline violators, thereby jeopardizing the credibility of the sanctions.
As if to prove the point, the Defense Department said it had awarded a $77.2 million jet fuel contract to Amerada Hess, a major oil refiner that was found earlier to be in violation of the administration's price standards.
The disclosure came just as the Supreme Court on Monday declined to review a lower court decision upholding the President's power to deny government contracts to guideline violators.
"We determined that an examption should be granted in order to satisgy critical jet fuel requirements in the Atlantic, European and Mediterranean theaters," a Pentagon spokesman said.
The spokesman said that the fuel would cost about $49 million more if purchased on the foreign market -- implying that it may sometimes be less inflationary to buy from a guideline violator than from other sources.
Amerada Hess is thus far the only company to have been cited for violating the guidelines by the Council on Wage and Price Stability and declined to appeal the decision.
Another major company, United Airlines, has been found to have violated the wage guidelines in a contract negotiated with the International Association of Machinists after a 55-day strike by the union. United is contesting the ruling.
But United has few if any federal contracts exceeding the $5 milliom thereshold for the sanctions. President Carter could urge -- althoug apparently not legally order -- government byreaucrats not to fly United, although some officials question the effectiveness of such a response. Moreover, somebody is bond to ask what the government is going to do with all those half-fare "united coupons it's been squirreling away. "They might try them with peanut butter and jelly," suggested an industry official.
The rubber industry presents another problem. Uniroyal, Firestone and Goodrich have been cited for "probable noncompliance," the first step toward contract debarment. Officials say they expect Goodyear, the largest of the "Big Four Four" rubber companies, to join the group when it negotiates its version of the pattern agreement that the government has found in violation of th guidelines.
Together, the four companies have an estimated $400 million or more in federal contracts, for products ranging from tires to military hardware. Anti-inflation officials contend the rubber industry is vulnerable to sanctions, noting Uniroyal's rush intofederal court Monday for a temporary restraining order after it was debarred for alleged sex discrimination. But they concede that national security exceptions are possible, and some wince at the idea of having to turn to a foreign-owned producer like Micheline for tires.
General Electric Co. poses the largest single challenge: $2 billion a year in federal contracts. The company recently agreed to wage increases of about 30 percent a year. But government officials have been unusually closed-mouthed about the GE contract.
If the government appears shackled, the AFL-C10, which had brought the case against the guideline sanctions, appeared no less thwarted. AFL-C10 President George Meany, calling the litigation "inconclusive," renewed his proposal for mandatory wage-price controls and suggested other legal challenges. Neither suggestion elicited any immediate respinse. any immediate response.