The General Accounting Office has concluded that allegations saying Lockheed Shipbuilding and Construction Co. overcharged the government about $8 million for steel used to build seven war vessels were "unfounded."
The GAO findings came in a letter to Sen. William Proxmire (D-Wis.) who had asked the GAO to investigate after Goodwin Chase, chairman of the Renegotiation Board, made the allegations a year ago.
Renegotiation Board officials yesterday disputed the GAO findings, insisting that the company, a subsidiary of Lockheed Corp., had failed to account for all the steel it claimed was used in the project.
But Bob Stephens, an auditor for GAO, said the Renegotiation Board had used faulty methodology in making its charges.
He also said the amount of steel used in the projects was not a factor in determining the validity of the claims.
The dispute arose over a contract for seven amphibious transport docks ships Lockheed constructed for the Navy. After completing the ships, Lockheed presented claims for an additional $62 million in compensation.
The Renegotiation Board disputed the claim, saying in part that Lockheed had charged the Navy for more steel than it could possibly have used.
In its original claim, Lockheed did not cite a figure for the amount of steel used. But the board concluded through its own calculations that the company had charged as much as 208 million pounds of steel to the Navy project, at a cost of $18.1 million.
Timothy Driscoll, a special assistant for the Renegotiation Board, said the Navy had calculated that the completed ships weighed about 84 million pounds. Allowing for scrap during construction, the project could have required 90 million to 100 million pounds of steel, according to Driscoll. On the basis of those figures, the Renegotiation Board concluded that there was a discrepancy of as much as 117 million pounds.
Lockheed later said it had used roughly 130 million pounds of steel. In its letter to Proxmire, the GAO said it had concluded that the company used approximately 134 million pounds, at a cost of $10.8 million.
"We took the 117-million-pound discrepancy the Renegotiation Board said was unaccounted for and essentially worked it down to nothing," the GAO's Stephens said.
Renegotiation Board officials, however, said yesterday that GAO had failed to examine their complaint properly.
"Even if we use the GAO figure of 134 million pounds, there are 40 million pounds of steel being wasted," Driscoll said. "We know Lockheed bought the steel, but where it went, well, there's no chicken tracks."
Driscoll said the GAO audited Lockheed's purchases, while the Renegotiation Board examined the Lockheed claims. The board's chairman Chase said in a prepared statement, "The GAO audited one set of figures while the board used another."
But Stephens dismissed the criticism.
"We discussed the figures with the Renegotiation Board, but simply found that their methodology was not valid," he said. "We gave them full consideration."
Proxmire said he believes the GAO report is "probably correct."
"The GAO is very careful about things and they are usually right. The board just made a mistake."
Roy Anderson, chairman of the Lockheed Corp., issued a statement saying, "We are extremely pleased that the thorough investigation conducted by the GAO has cleared the air and confirmed the company's positions and the findings of our own internal auditors. We consider the matter closed."
Reluctantly, the Renegotiation Board officials agreed that the matter was closed. "As far as I am concerned, that's it," Chase said. "I don't know what else there is to do. I feel no differently that I did last August, but there is nothing else for us to do."
A similar investigation by the FBI, begun in April 1975, is continuing, however. The GAO told Proxmire that one reason the inquiry took so long was that it had to obtain access to work by the FBI.
FBI information officer Steve Gladis confirmed that the FBI investigation into Lockheed was continuing, but gave no indication when it might be completed.