The Pentagon announced yesterday that Mary Ann Gilleece, a top procurement executive, has resigned while under investigation by the Defense Department inspector general for soliciting business from defense contractors for a firm she intended to establish after leaving the government.
Gilleece "violated" Pentagon "standards-of-conduct" rules and "created a lack of public confidence in her official actions," but "there is no evidence" that she violated criminal conflict-of-interest laws covering government employes, Joseph H. Sherick, the Pentagon's inspector general, said in his 10-page report released yesterday.
Gilleece's resignation is effective Friday. Pentagon officials said she submitted it last Tuesday, three days before Sherick's report was completed.
The officials sought to keep her resignation separate from Sherick's report, saying that Gilleece is leaving because her job as assistant secretary of defense for acquisition and logistics was abolished under a reorganization plan.
But she has been under scrutiny inside and outside the Pentagon since early summer for activities that raised the possibility of a conflict of interest.
On June 27, Sen. Carl Levin (D-Mich.), a member of the Senate Armed Services Committee, went beyond her solicitations for defense business and asked about her financial arrangements with Frank Bane, TRW Inc.'s director of government-business policy.
An aide to Levin said yesterday that Gilleece refused to answer most of the questions in the senator's letter, but did confirm that she owns a house in Alexandria with Bane in what the aide called "a second-trust arrangement."
TRW was the 24th-largest defense contractor in fiscal 1984, with $982.6 million in Pentagon business.
Levin said through a spokesman yesterday that he would study Sherick's report before deciding whether to pursue the Gilleece case.
After Gilleece's job was eliminated by the reorganization, she served as an aide to James P. Wade Jr., a former deputy to the Pentagon's research director and now the Pentagon's procurement czar. He called her "a valued member of my staff."
Gilleece has declined to meet with reporters to discuss her solicitation of defense contractors, but acknowledged through a spokesman in June that she had sent out about two dozen letters.
In his report, Sherick said that Gilleece had recalled sending material to 25 defense contractors and two law firms about her plans for a consulting business to be called Procurement Strategy Corp. Gilleece and her deputy at the Pentagon, Carl Michael Mayer, were to be the only shareholders.
"Procurement Strategy Corp. assists clients to compete for government business with confidence and success," Gilleece wrote in her solicitations. "PSC provides a thorough understanding of the internal forces motivating government customers, particularly the Department of Defense . . . . PSC will schedule meetings with key officials . . . ."
In one letter appended to Sherick's report, Gilleece wrote Magnavox Electronic Systems Co. on May 21:
"You should know that I am now fully committed to a consulting business. If you believe we are essentially ready to go, I would welcome Magnavox as our first client. We are ready to discuss a contract for services to begin Sept. 1, 1985. We anticipate annual contracts at $30,000 for a limited number of clients (no more than 15)."
She listed her Pentagon telephone number and added: "I hope you will call as soon as you get a chance."
In a June 11 letter to Westinghouse, Gilleece appeared to be trying to capitalize on the procurement scandals she was supposed to prevent in her Pentagon job. Her letter began:
"Current national attention to procurement matters has resulted in a high level of congressional activity and promises to further complicate the already difficult process of doing business with the government. This situation, coupled with my own desire to focus my efforts in the private sector, has led me to form a consulting organization specializing in procurement issues."
Later in the letter, she wrote: "I believe there is a substantial benefit for Westinghouse in obtaining experienced representation in acquisition matters to complement the company's own efforts on behalf of its program . . . ."
In June, Pentagon spokesman Fred S. Hoffman said "there's no reason to challenge the propriety" of Gilleece's solicitations because she had disqualified herself from official dealings with the companies solicited.
Sherick said in his report that, although Gilleece "testified her letters were not intended to be solicitations for business, they gave the appearance that they were and were perceived as such by many of the recipients . . . . We recommend that Ms. Gilleece be removed from acquisition-related responsibilities."