Members of the Renegotiation Board invoked the newly revealed Lockheed shipbuilding case yesterday as a prime example of the need to beef up their powers to recapture excessive profits on government contracts.
Goodwin Chase, the board's chairman, told a Senate Banking subcommittee that the Lockheed affair - in which the firm's shopbuilding subsidiary allegedly billed the government for about $8 million worth of steel it did not use on government jobs - "proves that the Defense Department cannot, on its own, protect the tax-payer against overcharging by contractors."
The case involved two different Navy contracts with Lockheed Shipbuilding and Construction Co., a division of Lockheed Airport Corp.
According to Renegotiation Board auditors, Lockheed billed the navy, and was paid, for 80 million tons of steel that was not used in building the Navy ships.
The board's investigation did not determine what the excess steel was used for. But at yesterday's hearing, subcommittee Chairman William Proxmire (D-Wis.) said the firm apparently used the Navy-purchased steel on commercial shipbuilding projects.
Lockheed officials have refused to comment on the shipbuilding contracts, except to acknowledge that the Justice Department has been investigating the firm's billings.
The Lockheed case, which was reported in yesterday's Washington Post, became a central point in yesterday's hearing. The session concerned a bill introduced by Proxmire that would strengthen the Renegotiation Board's authority to take back - excess profits earned by contractors who sell defense and space equipment to the government.
Proxmire bill to strengthen the Renegotiation Board, and a similar measure sponsored in the House by Rep. Joseph G. Minish (D-N.J.), have faced heavy lobbying by defense contractors.
Opponents of renegotiation have argued that the Defense Department's extensive hierarchy of procurement experts and auditors makes renegotiation unnecessary. This view has won considerably suppolt in Congress.
But yesterday Chase and another board member, Harry Van Cleve, pointed out that the Lockheed contracts had been approved by several levels of Pentagon procurement personnel. Chase sad the steel discrepancy had not been caught until the completed contracts came to the board for renegotiation. This was so, he said, because the contracts were of a type that Pentagon auditors do not supervise closely.
Sen. Richard G. Lugar (R-Ind.), who expressed skepticism about the Proxmire bill at yesterday's hearing complained that the Lockheed case had been "dredged up from the past" to dramatize Chase's testimony.
Lugar noted that the contracts in question had been awarded in the early 1980s and completed in 1972.
The House version of the renegotiation bill, which has been held up in the Rules Committee for five weeks because of extensive business lobbying, is expected to be approved by that committee today.