A Senate panel yesterday took on the Navy and Virginia's largest private employer, Newport News Shipbuilding and Drydock Co., alleging that the two may have wasted more than $700 million in extended construction schedules, inflated profits, excessive incentives and noncompetitive contract awards.
At a hearing yesterday, Sen. William V. Roth (R-Del.) said the Navy's contracts with the company for three nuclear-powered aircraft carriers and four submarines, including the newly launched carrier Theodore Roosevelt, illustrate that military spending is often "nothing more than spare-parts overpricing problems run large."
The Senate Governmental Affairs Committee, chaired by Roth, released findings indicating that the Navy agreed to give Newport News a $21 million bonus to complete work early on the Theodore Roosevelt, even though it was clear, from reports by private and Navy consultants, that the company would have been able to do so anyway.
Commodore Stuart Platt, the Navy's competition advocate general, testified that Newport News is the only U.S. company capable of building the carriers and that "We were unable to get the company to agree to a shorter timetable."
Roth and Sen. William S. Cohen (R-Maine) suggested that Newport News may have negotiated a longer contract knowing it could finish earlier, thereby assuring cash incentives for an early date.
Representatives of the company did not testify at yesterday's hearing but will be invited to speak at subsequent ones, a committee spokesman said.
The senators also criticized the Navy for awarding the contract for submarines to Newport News without competitive bids.
Platt said the Navy made the "sole-source" award to Newport News in part to help build up what it said was a lagging company in the late 1970s. The Navy thereby hoped to make Newport News more competitive in an industry dominated by a few companies, Platt said.
According to the committee's findings, the sole-source award for submarines is costing the Navy $111.7 million more than the Navy originally offered to spend.
The two Republicans criticized the Navy's negotiations in the Newport News contracts, saying such practices undermine public support of defense spending.
"If you can't show that military procurement is cost effective, you're going to lose the support of the public," Roth told Navy representatives at the hearing. "We've got to put the government in the position where we're not dependent on the good will of the contractor."
The committee has been looking into defense procurement practices in light of reports of grossly inflated prices for small parts used in government contracted jobs.
Navy representatives maintained throughout the hearing that the bonuses were meant to hasten delivery and were thought to save money. Certain cost overruns were the result of the Navy's own revised construction plans, they said.
Cohen said he plans to reintroduce legislation that will make contractors liable for civil suits when their contract estimates are based on false or inaccurate information. Past efforts to pass such legislation have been killed by shipbuilding lobbies, Cohen said.