Sen. William Proxmire (D-Wis.) introduced a resolution yesterday to forbid the Navy from paying two shipbuilders a total of $541 million in disputed back bills.
"The Navy would rather quit" and pay the bills "than fight for its contractual rights." Proxmire said at a hearing on the claims filed against the Navy by the Electric Boat division of General Dynamics and by Ingalls Shipbuilding Division of Litton Systems. "John Paul Jones would turn over in his grave."
The Navy, in hopes of settling a long-standing dispute over who owes whom how much, intends to pay Electric Boat $359 million more than the $125 million recommended by a Navy review board, and to pay Litton $182 million more than the recommended $265 million.
The shipbuilders had demanded much larger increases, Navy Secretary W. Graham Claytor told a Joint Economic subcommittee, asserting that the proposed settlement would be fair to both the government and the contractors.
"This is not a bonanza for the companies," Claytor testified. "They took a terrible bath" by agreeing to settle for less than they claimed the Navy owed them.
Proxmire countered, "I certainly can't have tears in my eyes for General Dynamics," noting that the company's stock rose steadily after the claims settlement figures were announced. The same was true of Litton, he said.
Unless either the Senate or House passes a resolution by Sept. 19 disapproving the plan, the Navy will pay Electric Boat and Litton the extra $541 million under a streamlined legislative procedure called 85-804.
Proxmire said last night he faces "an ods-against but by no means hopeless" situation in his attempt to win Senate adoption of his disapproval resolution by Sept. 19. The outlook is equally dim in the House.
The senator warned that going through with the expedited payments would impel other shipyards to demand the same kind of special treatment of their financial claims against the Navy, with Newport News Shipbuilding Division of Tenneco a case in point.
That contractor claims the Navy owes $741.6 million in back bills on nuclear powered submarines, aircraft carriers and cruisers - an amount also in dispute but on the verge of settlement, according to top Navy officials.
Proxmire asked Edward Hidalgo, the Navy assistant secretary who is heading the effort to settle claims whether Newport News Shipbuilding had asked for the same kind of special 85-804 relief that had been extended to Electric Boat and Litton.
"I don't remember any specific request of that kind," Hidalgo replied at yesterday's hearing.
Proxmire pulled out a June 21 letter to Hidalgo from Newport News Shipbuilding making just such a request.
"Isn't it true that they asked for relief?" Proxmire asked after putting the letter in the record. "Why wasn't the answer clearly affirmative?"
"You're right, you're right," Hidalgo replied hurriedly, later saying he did not consider the letter "a formal request" for the expedited settlement.
"If this is not a formal request," scoffed Proxmire, "then I've never seen one."
Claytor and Hidalgo steadfastly refused to tell Proxmire how much of the $741.6 million Newport News Shipbuilding claim the Navy intends to pay.
The firm has been given a suggested settlement figure but to divulge it could jeopardize the final negotiations, they said.
"If the Navy knows it and the contractor knows it," said Proxmire, "why shouldn't the taxpayers know it?" But Claytor and Hidalgo refused to budge.
Proxmire said last night that since there is so little time until the Sept. 19 deadline, he will tack his disapproval resolution onto an upcoming bill for a vote rather than entrust the Senate Armed Services Committee, which favors floor.