The Navy, in a major policy shift that reflects its difficulties with defense contractors, will reserve 40 percent of its future admiral slots for officers who have specialized in weapons procurement or management rather than command at sea, Navy Secretary John F. Lehman Jr. announced yesterday.
Lehman said the move is aimed at attracting top-flight officers to the arcane and unglamorous world of weapons acquisition, offering them a clear path to a rank previously filled mainly by those who proved themselves at sea.
Calling his decision the most far-reaching personnel reform in 100 years, Lehman said the Navy will send officers to places such as Harvard Business School to develop business management skills to match those of defense contractors.
"It serves notice that they contractors are going to see across the table from them a steadily increasing level of experience and expertise that will make the process a lot more effective," he told reporters.
The shift comes as Congress is challenging the Reagan administration's $313 billion defense budget and focusing on the billing practices of the nation's top weapons manufacturers as evidence of runaway costs allowed by the Pentagon.
Contractor charges to the Navy of $600 for a toilet seat and $16,571 for a refrigerator have fueled budget-cutting sentiment on Capitol Hill. Navy officials say that two-thirds of the 100 admirals in top procurement jobs, and most of their subordinates, have little expertise. Since those posts have been seen as dead ends in a service that rewards sea duty, they return to the fleet as soon as possible. As a result, the Navy's ability to deal with contractors has been "tragically flawed," said Adm. James D. Watkins, chief of naval operations, who participated in the briefing.
"It was almost impossible for naval officers in uniform to come up to an acceptable level of business management in the modern industrial world," he said. "We simply were naive, not well prepared, and we didn't stick to it long enough."
He said naval procurement officers have been unable to counter "slicks from industry" who often bid low in negotiations knowing that they can make up the difference with contract modifications or new contracts.
As a remedy, Lehman said, the Navy will reserve 100 of its 253 admiral slots -- 100 posts that already involve weapons procurement and maintenance -- for officers who have "solid credentials as experts" in managing and acquiring weapons systems.
A new officer program for "materiel professionals" will be established for those of commander rank or higher who will devote the rest of their careers to procurement, maintenance, technology and logistics of weapons. They will be screened by a board of top Navy officials who will select the first class in July.
Those qualifying for the program will be offered a 15-month business management course at the Naval Postgraduate School in Monterey, Calif., or at such places as Harvard and the University of Pennsylvania's Wharton School of Business.
Lehman, asked if the program will accelerate the revolving door syndrome by training officers who will leave the service for higher paying jobs in private industry, said the selection process is designed to screen out opportunists and to encourage "front-runners, not those on their way out of the Navy."
Lehman said "materiel professionals" gradually will fill the admiral slots in the procurement area as current occupants rotate to sea duty.
As Lehman was moving to improve the Navy's ability to deal with contractors, Rep. Bill Nichols (D-Ala.) announced that P. Takis Veliotis, a former General Dynamics Corp. executive who lives in Greece as a fugitive, has agreed to testify before a House Armed Services subcommittee, possibly by satellite.
Veliotis' charges of company fraud in billing the Navy for cost overruns on submarine contracts have triggered several investigations of the nation's largest defense contractor. He is under indictment for allegedly taking kickbacks on ship construction.