If the Pentagon procurement system has run amok, American defense contractors aren't the only ones who are cashing in on the situation. An Israeli arms dealer, Shlomo Zabludowicz, has also landed lucrative military contracts and has come to the attention of federal investigators.
On June 14, the FBI searched the home of Melvyn Paisley, former assistant secretary of the Navy. Among other things, agents were looking for indications that Paisley had helped Zabludowicz obtain military contracts between 1981 and 1988. Paisley is a central figure in the Pentagon procurement probe, but no charges have been filed.
The latest Pentagon contract given to Zabludowicz's firm, Soltam Ltd., was announced in March. Soltam, in a joint venture with Martin Marietta Corp., won a $270 million contract to build 120mm mortars for the Army.
The decision to buy the Israeli-designed mortars came after four years of wrangling between Congress and the Army. In 1984, Congress authorized the Army to pursue a mortar contract. Zabludowicz celebrated by hosting a party at his Washington home for the Senate Appropriations defense subcommittee, a committee staffer and other sources told our associate Jim Lynch.
The cozy relationship apparently bothered Sen. Barry Goldwater (R-Ariz.). Immediately after he replaced Sen. John G. Tower (R-Tex.) as Senate Armed Services Committee chairman in January 1985, Goldwater sent a letter to Army Secretary John Marsh Jr. The congressional authorization bill had included some conditions that appeared to make Zabludowicz the only possible supplier. Goldwater said that wasn't what Congress had in mind. "There was clearly no intent to stifle competition or to accelerate the acquisition process to the point where adequate testing was not possible," he wrote. After the Goldwater letter, at least two other companies entered the mortar competition before losing out to Soltam this year.
Throughout the years that Zabludowicz waited in the wings, Rep. Joseph M. Dade (R-Pa.) went to bat for him. McDade, the ranking Republican on the House Appropriations defense subcommittee, was looking out for his constituents back home.
United Press International recently reported that Soltam had assured McDade it would put the production plant in McDade's district if Soltam won the contract. A spokesman for McDade said there was "no proof" of such a deal and the production site has not been chosen. But he noted that Soltam has strongly considered building the plant near a testing facility owned by Pocal Industries in Scranton, Pa., which is in McDade's district. Zabludowicz is one of the principals in Pocal Industries.
We have obtained Army records indicating McDade badgered the Army with at least six letters trying to hasten selection of a mortar contractor. Army records also show 14 phone conversations between McDade and Army Undersecretary James Ambrose from May 1985 to May 1987.
McDade maintains that he pressed the mortar issue because the Army needed to upgrade its antiquated systems and that he supported open competition for the contract. Zabludowicz refused to discuss the federal investigation or mortar contract.