The House, reacting angrily to abuses by defense contractors, voted overwhelmingly yesterday to impose stiff fines and jail sentences on contractors who bill the Defense Department for unacceptable costs.
The penalties were approved, by voice vote and then by a 411-to-4 roll call, after many members took the podium to attack the Defense Department's weapons-buying system and the ethics of the multibillion-dollar defense industry.
Lawmakers cited such cases as those in which contractors charged $7,622 for a coffee machine, $640 for a toilet cover and $748 for a pair of pliers.
"The taxpayers of this country are being fleeced by today's system," Rep. Ron Wyden (D-Ore.) said. "Today's system has more holes in it than a piece of Swiss cheese."
Rep. Dennis M. Hertel (D-Mich.), a sponsor of the penalties measure, said defense-industry abuses have undermined public support for the Pentagon and defense spending.
The penalties were part of a package of defense-procurement reforms adopted, in most cases overwhelmingly, as amendments to the 1986 defense authorization bill. Some would substantially tighten Pentagon practice. Under the current system, for instance, contractors who bill the government for unallowable costs must simply repay the Defense Department and do not face fines or jail.
The House action came within a week after a report by a House committee investigating contracting abuses in the defense industry that the Defense Department's inspector general is conducting criminal investigations of nine of the 10 major defense contractors for various contracting abuses.
In April, Inspector General Joseph H. Sherick reported that 45 of the 100 largest defense firms were being investigated.
The House voted, 240 to 176, against an amendment that would have given the inspector general broad new powers to go after defense contractors, including the ability to suspend payments to or debar contractors that he determines are violating the law.
The House approved several other amendments, including one designed to slow the "revolving door" between the Pentagon and defense industry, and continued debate on several others.
The "door" amendment, approved 397 to 19, would prohibit any Pentagon employe with "significant" responsibility over contracts from going to work for a contractor, which the employe helped supervise, for two years after leaving government service. The same waiting period would apply to members of Congress when they retire.
The House also voted, 416 to 0, to ask the Defense Department to begin slowly increasing the percentage of contracts let for bidding so that, by 1992, 70 percent of them would be bid competitively.
Before adjourning late last night, the House adopted an amendment that requires competitive bidding for 50 percent of the dollar value of contracts let by the Pentagon for major weapons systems each year. The vote was 342 to 52.
The amendment approving penalties would bar the Pentagon from compensating defense contractors for various items ranging from country club memberships, alcoholic beverages, advertising and lobbying costs, legal fees and excessive travel costs.
Recent House hearings revealed that General Dynamics Corp. billed the government "overhead" charges for such items as babysitting fees, kenneling of an executive's dog and a trip by the company chairman to his weekend farm on the corporate jet.
Under the measure, contractors who knowingly submit expense claims for prohibited items could be fined a maximum of $250,000 and, in the case of a second offense, sent to jail for a maximum of five years. A corporation could be fined as much as $500,000.
Last month, the Senate approved weaker penalties against contractors who bill the government for unacceptable costs. Differences between the two chambers must be worked out in conference after the House has completed action on the defense bill, possibly this week.
Hertel said during debate that the House now favors a defense spending freeze, strongly opposed by the Reagan administration, "because of the outrages by some of the defense contractors in stealing from the taxpayers, in stealing from the Pentagon, in stealing from the men and women in the military."
But Rep. Thomas N. Kindness (R-Ohio), one of few dissenting voices yesterday, said, "I hate to be the skunk at the family picnic, but there is another side to the story."
He said the Pentagon has in place several regulations prohibiting contractors from charging certain costs to the government. Passing a law codifying those restriction would lessen the Defense Department's flexiblity to react to new excesses, he said.
In addition, he said Congress must look at procurement issues involving all government agencies, not just the Defense Department, and not just react "emotionally" to media reports about high-priced coffee machines and toilet seats.
Rep. Dave McCurdy (D-Okla.) said yesterday that he and other lawmakers promoted a procurement-reform package in the House four years ago but got nowhere.
"The mood wasn't there. The mood was give them what they want. The circumstances in the defense industry haven't changed," he said, but "the mood in Congress has."
Rep. Charles E. Schumer (D-N.Y.) said much-publicized accounts of "the $7,000 coffee pots" has undermined public support for defense spending in much the way news stories in the 1970s about "welfare mothers drinking vodka" and driving Cadillacs undermined support for programs to help the poor.
"It's the kind of thing that is going to last for years," Schumer said.