A House subcommittee yesterday approved a bill to stiffen the contract renegotiation process after hearing testimony that the legislation would save the government as much as $1 billion annually.
The House Banking Oversight Subcommittee approved the bill, sponsored by subcommittee Chairman Joseph G. Minish (D-N.J.), on a 7-to-4 party-time vote, with all Democrats supporting the chairman.
The bill would strengtehn the authority of the Renegotiation Board, the agency empowered to recapture "excessive profits" earned on contracts with federal agencies.
Similar legislation passed the House last year, but died in a Senate committee. Sen. William Proxmire (D-Wis.), the bill's Senate sponsor, says its chances for Senate passage are considerably brighter this year.
The bill approved by the subcommittee was praised yesterday in testimony by Renegotiation Board Chairman Goodwin Chase, by Adm. H. F. Rickover, chief of the Navy's nuclear fleet and a long time supporter of tougher renegotiation, and by witnesses from the General Accounting Office and the Justice Department.
It was Rickover who estimated that the changes reflected in the Minish bill would increase the amount of profit recaptured by "$700 million to $1 billion every year." Chase said he couldn't support that specific estimate, but agreed that "the extent of excessive profit that the board does not reach is staggering."
Rickover and Chase said the legislation would increase the government's receipts by eliminating significant exemptions in current law that have permitted some of the largest government contractors to escape renegotiation completely.
If Rickover's estimate is borne out, there would be an enormous increase in the amount recovered through renegotiation. In recent years the board has taken back about $50 million annually, most of it from relatively small firms.
Minish failed yesterday in an effort to make the board, which has existed on a "temporary" basis since the Korean war, a permanent agency. The bill approved by the subcommittee would extend the board's life until 1982.
During hearings on the Minish bill this week a parade of small businessmen complained about the paperback and personnel burden imposed by renegotiation. In response, the subcommittee agreed that firms with total sales under $4 million annually would be exempt from the board's jurisdiction. The previous cut off was $1 million in annual sales.
Minish said the full Banking Committee would consider the bill Tuesday.
Rickover, who has been charming congressmen for two decades to win their support for nuclear ships, offered a tour-de-force of congressional testimony yesterday.
He began by praising the subcommittee members, by name, for their dedication to principle and the public interest. He excoriated the lawyers and lobbyists - "those guys in the $500 suits" - who had testified on behalf of contractors in opposition to the Minish bill.
The admiral's testimony ranged from specific comments on the legislation to sweeping analyses of events from Russian, Roman and American history.
Asked to discuss one aspect of the Renegotiation Act. Rickover responded, "That reminds me of the Emperor Vespasian . . . " and launched into a story about government contracting practices in the late Roman Empire.
During a recess, the admiral lectured Rep. John H. Rousselot, a conservative Republican from California, about how conservatives could recover from their decline in political power.
All of which went over perfectly with the members of the subcommittee, who used most of their allotted question time to praise the admiral and his testimony.