After General Dynamics Corp. was indicted for fraud -- charged with submitting phony bills to the government for work on the now-abandoned DIVAD antiaircraft gun -- the Navy, acting for the Department of Defense, suspended the giant company from receiving any new federal contracts.
But is the Pentagon really serious about punishing its third-largest contractor, which had prime contracts totalling about $6 billion last year (and is doing even better this year)? It doesn't seem so, for the day after the Navy suspended General Dynamics, it extended "indefinitely" the deadline for bids on four nuclear-powered subs in order to keep General Dynamics in the running. General Dynamics, meanwhile, has 30 days in which to challenge the suspension.
This lends credibility to the charge by Pentagon critic Dina Rasor that the military establishment only wants to calm down congressional and press critics of its contracting practices, but intends to do little about curing waste and tackling fraud. And it supports charges by Sen. Charles E. Grassley (R-Iowa) that there is a "cozy relationship" between the Pentagon and defense contractors who are allowed to enjoy and preserve a monopoly on production of certain equipment.
Rasor said in an interview : "I'm afraid the suspension will be just another slap on the wrist. Right now the Pentagon is telling the public how outraged they are, but winking at the contractor."
General Dynamics already had undergone one suspension this year -- a token affair that merely delayed payments to it for 90 days. Rasor, who has blown the whistle before on the skullduggery that goes on between the Pentagon and the business world, says that "if General Dynamics is defrauding the government, somebody should go to jail" and the government employes who were in charge of auditing General Dynamics should be fired.
But in these military-procurement cases, nobody gets fired and nobody ever goes to jail. If somebody had to accept the responsibility for messing up, the public interest would be better protected. "When you reach down in the bureaucracy to try to grab the scoundrel by the scruff of the neck, you reach into mush," Rasor said on National Public Radio's "All Things Considered." "It's not only in procurement in the Pentagon -- who was responsible for the Beirut bombing? Finally, President Reagan took responsibility, but nobody got fired."
Rasor said companies such as General Dynamics tend to regard suspensions "as a paid vacation" because, once the Pentagon relents, they find a way to charge the cost of their workers' idle time to the taxpayers.
Grassley, chairman of the Senate Judiciary subcommittee on administrative practices and procedures, is pleased by the suspension of General Dynamics. But he pointed out on NPR that the performance of the Pentagon and the Justice Department "has never been commensurate with their rhetoric."
"I have doubts," Grassley said. "As a member of the check-and-balance part of government, you know, I'm going to sit back and say, 'I hope this is a new day.' . . . I want to make sure, though, that the follow-through on General Dynamics isn't similar to other cases this year, where administrative action was taken and, two or three months down the road, it was business as usual."
The only thing that has pushed the administration this far is pressure from Capitol Hill, press criticism and publicity generated by activists such as Rasor, who is persona non grata in military circles for her books on wasted procurement money, the latest one of which is "The Pentagon Underground."
General Dynamics' alleged overcharges on the DIVAD contract -- which led to indictment of four former or current executives, including (to the administration's acute embarrassment) NASA Administrator James M. Beggs -- were flushed out in a series of hearings held by Rep. John D. Dingell (D-Mich.). According to the Justice Department, overruns totaled $3.2 million on a $41 million contract to build a prototype of the DIVAD -- and, according to the government's case, these were covered up by charging them to two other defense contracts.
The government last year pursued reported fraud in nearly 1,000 different defense procurement cases, up from about 700 the year before. It is a foregone conclusion that there are thousands of cases we never will hear about. Grassley believes that the Pentagon and Justice Department have been afraid to go after big contractors, while pursuing fraud and cheating among smaller contractors.
"There's a feeling in government to some extent that, when you're so dependent on a company like General Dynamics, that they manufacture so much, they're so important to our defense production, that we ought to tolerate some of this. The point is that that invites further abuse," Grassley said.
There is little doubt about General Dynamics' importance: It produces the Air Force's F16 jet fighter and is also the sole producer of the nuclear-powered Trident submarine. It makes the Navy's Tomahawk cruise misile, the Army M1 and M60 tanks -- and more. But should any one company enjoy this monopoly power -- so much that the government fears to crack down on it? Rasor says that the government owns the designs for many of these items and easily could farm the business out to others.
"If they're serious about suspending General Dynamics, they could start by taking the M1 tank, which is built in a government-owned and government-operated plant and threaten to break it out and have another company come in and manage that plant instead of General Dynamics," she contends.
"If they were really serious about suspending General Dynamics and they still want F16s, we own the design. They could say to General Dynamics, 'We're going to suspend you,' take the F16 design and allow others to compete."
The danger in the present situation is that, after the dust settles from the present storm, the "cozy relationship" to which Grassley refers will resume, assuring that waste and fraud will be unimpeded. I agree with Rasor: It's time to get tough and mete out some punishments commensurate with the crimes. If the Pentagon can't get other companies interested in defense business, at least it ought to keep those now in it honest.