Congress is definitely of two minds about ending waste, fraud and abuse in the Pentagon. Of course, our legislators want to answer the public's demand for action against military-industrial roguery; on the other hand, they hate to offend contractors who bring jobs to their districts and money to their campaigns.

The ambivalence is apparent in the curious case of Sen. Orrin Hatch (R-Utah), who not so long ago proudly sponsored a reform measure and now has moved to stop it from getting to the Senate floor.

The bill in question is an attempt to revise and update "Lincoln's Law" -- a bill signed by our most saintly president. Lincoln's saintliness had snapped at the sight of musket cases filled with sawdust by rip-off artists of the Civil War era. The resulting False Claims Act of 1863 invited all citizens to become whistleblowers -- to go into court on behalf of the government against the thieving contractors and collect half the damages awarded.

Eighty years after the law was signed, World War II defense contractors succeeded in defanging it. Their plea: Its strictures would impede the war effort. The so-called "bounty" aspect was dropped, and if the fraud was known to the government, the suit could be dismissed.

Sen. Charles Grassley (R-Iowa), whose single-minded pursuit of cost-cutting has proved its power as an issue and made him the most popular politician in the history of his state, is the prime mover to amend Lincoln's Law. He would reinstate rewards for the citizen whistleblower, guaranteeing him or her 10 per cent of the rip-off with a possibility of up to 30 per cent. He also would protect the sleuth from retaliation by employers.

Grassley had the satisfaction of seeing his bill voted unanimously out of the Senate Judiciary Committee. So he is baffled by Hatch's second thoughts. During the deliberations, Hatch expressed no objections and never told Grassley that he was changing his mind. "His staff told my staff he was putting it on hold," says Grassley.

Hatch was unavailable for comment. But his legislative assistant, Randolph Rader, said no outside pressures were to be suspected.

Hatch had indeed put a hold on the False Claims Act, but, said Rader, he had also put a hold on a similar bill called the Civil Fraud Penalties Act, which deals with the problem in an administrative fashion.

"There is a lot of question of how the two interface," said Rader. "It is important that there be some good legal work to ascertain that they are not duplicative. A hold is not a vote against. It is a sign of careful legislative craftsmanship."

Susan Collins, staff director of the Governmental Affairs subcommittee which is in charge of the Civil Fraud Penalties Act, said staff meetings were held to iron out conflicts between the two bills and were generally regarded as successful.

Hatch has a history of blowing hot and cold on the matter of military-industrial skulduggery. He speaks against it, as befits a Mormon bishop, but shows little stomach for taking it on.

As chairman of a subcommittee that is supposed to look into questionable practices, he has twice come on strong and then backed off.

In 1982, he announced that he would be looking into the harassment visited on Ernest Fitzgerald, the Pentagon's premier whistleblower, following his reinstatement as an Air Force cost analyst. Hatch plunged in but finally called off the dogs.

At a recent meeting with Fitzgerald, arranged by a mutual friend, Hatch assured Fitzgerald that he had not in any way been pressured to drop his case by defense contractors and their friends in the Pentagon.

Fitzgerald remembers Hatch's saying, "I do not take orders from the contractors. I stopped because my staff said it was not worth going into."

More recently, Hatch ventured to look at the case of George Spanton, the Pentagon auditor who outraged his superiors by reporting massive waste, fraud and abuse in a Pratt-Whitney contract. Spanton was undergoing the usual fate of the Pentagon whistleblower. Hatch decided not to press forward -- although not, he told Fitzgerald, because his arm was twisted by the military-industrial complex.

Some Hill people speculate that the defense industry had been concentrating on the Civil Fraud Penalties Act and awakened only at the last minute to the greater menace of a toughened Lincoln's Law. But, thanks to Hatch's disowning his own bill, False Claims is on hold -- and so is any serious congressional action on Pentagon waste, fraud and abuse.