Air Force Secretary Verne Orr proposed yesterday to bar Rockwell International Corp. from all government contracts a day after the corporate giant pleaded guilty to overcharging the Defense Department $300,000 for military electronics work in 1982.
Orr said Rockwell would have 30 days to contest the proposed debarment, or exclusion, from contracts that have turned the company into the second-largest supplier of military equipment and the largest for the National Aeronautics and Space Administration.
In the interim, Orr suspended Rockwell from all new or renewed Defense Department contracts, which brought the firm $6.2 billion in business last year. The company's contracts range from production of the B1 bomber to developing part of the MX missile.
"I've taken this action to protect the taxpayers' interest and to send another clear signal that the Air Force won't tolerate this or other kinds of fraud regardless of the size of the contractor," Orr said.
Rockwell pleaded guilty Wednesday to a 20-count criminal indictment charging that six employes of its Collins Communications Systems Division in Dallas falsified time cards to inflate the costs of $3.6 million aircraft data processing and spare parts contract.
The company agreed to pay restitution of $1 million and the costs of the government investigation. It faces a maximum fine of $200,000.
Rockwell spokesman Jim Vallela, responding to Orr's announcement, said, "We are confident we can satisfy the concerns of the secretary of the Air Force and continue to demonstrate our responsibility as a defense contractor."
Orr's decision comes at a bad time for Rockwell. For more than a year, the company has been fighting in partnership with a British firm for a $4.3 billion contract to equip the Army with a new, mobile battlefield communications system. The contract has been contested by a team of GTE Corp. and a French firm, and a decision has been delayed by political involvement from British and French officials.
Orr said he expects that any debarment would be temporary, but he pledged to "keep it in effect until I'm sure that Rockwell has taken all steps necessary to safeguard against a recurrence."
Orr could exclude the entire company or separate divisions, and he could exempt certain contracts in the interest of national security.
According to Federal Acquisition Regulations, debarment of a company from contracts in any one department extends to all branches. In addition to its defense work, Rockwell received $1.4 billion in business last year from the NASA, including contracts for the space shuttle program and management of two space centers.
Although the Pentagon has debarred other companies, it has never banned a concern of Rockwell's size or importance in producing critical weapons.