Five years after the Renegotiation Board was allowed to die a quiet death, some members of Congress have launched a campaign to revive the small independent watchdog agency.
As the Pentagon's budget has increased over the past few years, so have allegations of abuses in defense procurement. Supporters of a revived board see it as a key to limiting those abuses; opponents deride it as just another elaborate bureaucracy that will cost more than it's worth.
This year, a bill to revive the board won the approval of a key House committee, while producing a curious twist to some traditional political alignments.
Cost-cutting Republicans are the principal opponents. And as in the past, there is little support for the board among its likely friends in the White House.
When Congress was threatening to sever the agency's lifeline in 1978, President Carter virtually ignored the agency -- despite an earlier pledge to beef it up as part of his 1977 anti-inflation package.
This year, efforts to revive the board have received no official support from the Reagan administration, which came to office pledged to trimming the fat out of government. The administration is taking a wait-and-see attitude, said a spokesman for the Office of Management and Budget. Some congressional sources, however, say the administration has been quietly lobbying against the bill.
Opponents argue that the board is an expensive liberal boondoggle that does not address the real problem of making defense contractors more accountable for their costs.
"There is no reason to bring back an elaborate bureaucratic mish-mash," said Rep. Stan Parris (R-Va.), ranking minority member on the House Banking, Finance and Urban Affairs subcommittee on general oversight and renegotiation, which considered the measure. "It cost more to run the board than the profits they renegotiated. . . . It would indeed be counterproductive."
Under the proposal for a new and improved Renegotiation Board, any defense contractor with a government contract of more than $5 million would be required to submit annual financial statements. The board could order the firm to reimburse the U.S. Treasury when it found that the company reaped "excessive" profits on the contract.
The board would be authorized to review contractors doing business with the Defense Department, NASA and the Nuclear Regulatory Commission, and the Transportation Department's Maritime Administration and Federal Aviation Administration. In determining excess profits, the board would be required to consider the project's complexity, the amount of risk the contractor faced, and the project's contribution to the defense effort.
The five-member board was first authorized in 1951, because of concerns that the defense industry might take advantage of a national emergency, in this case the Korean War, to make excessive profits. The normal safeguards, such as competitive bidding, often had to be bypassed during wartime. Renegotiation was viewed as a way to determine, after the fact, whether a firm had charged too much.
But in 1976, Congress allowed the board's authority to lapse by failing to reauthorize it during a House-Senate deadlock. The board was extended on an annual basis for three more years, then allowed to die.
Rep. Joseph G. Minish (D-N.J.), chairman of the oversight subcommittee, said the board's demise "has left the taxpayers unprotected from defense profiteering."
"With the defense budget approaching $300 billion," Minish told committee members during last month's mark-up session, "a watchdog agency is essential to ensure that these tax dollars go to a stronger national defense, and not those companies who would gouge the Treasury."
But the board still suffers from a reputation for mismanagement -- a reputation that forced even a supporter like Minish to deride its members in 1978 as "a bunch of idiots, with a capital I."
Parris and other opponents have argued that the board is unnecessary during peacetime, when normal procurement procedures are in place, that the board's functions have been replaced by a variety of strict new procurement controls, and that the revived board will cost more to administer than it will save.
Between 1951 and 1977, the board found $1.3 billion in excess profits and spent $103 million in salaries and operating expenses. Projections showed the revived board spending $9.4 million in fiscal 1985, and $11 million by fiscal 1988. Supporters and opponents differ sharply on just how much the board could be expected to find in terms of excess profits.
During the mark-up hearings, Rep. Stewart B. McKinney (R-Conn.) called the old board "one of the worst run government agencies that one could find. They were big on going after belt-buckle and web-strap manufacturers, and pretty darn poor about going after the large contractors."
Goodwin Chase, a former banker from Washington state who was handpicked by Carter to chair the board, acknowledged in a telephone interview that the board had problems. But he blames a lack of funds and Carter's later neglect. "If we had had the staff, we could have easily brought in hundreds of millions of dollars," he said. "I feel that Jimmy Carter did not do anything."
But Chase said the mere existence of the board helped deter defense industry abuses.
On one thing both the agency's supporters and opponents can agree: in the current legislative logjam, the bill to reestablish the board is unlikely to be pried from the Rules Committee before Congress adjourns. But supporters intend to reintroduce it when Congress returns next year.