The Navy put off a decision yesterday on awarding contracts for a new group of nuclear-powered attack submarines, a move that could allow General Dynamics Corp. to compete for the work despite its suspension Tuesday from receiving new government contracts.
The postponement, made yesterday by Assistant Secretary Everett Pyatt and confirmed by Secretary John F. Lehman Jr., was justified on grounds that the Navy "cannot afford to have the construction of attack submarines become a sole-source program."
The move illustrates the Pentagon's difficulty in barring a major defense contractor from military work for an extended period. Even a suspended company can be granted a national-security exemption to build a weapon that no one else can make, although that provision has not been invoked in this case.
Only two companies can produce the Los Angeles-class vessels: General Dynamics' Electric Boat division and the Newport News Shipbuilding & Dry Dock Co.
According to a knowledgeable Navy official who asked not to be identified, Pyatt decided to maintain General Dynamics' chances to bid on the next group of four attack submarines by extending "indefinitely" a deadline Friday for submission of "best and final offers."
"Obviously if the suspension goes for an extended period, the situation might change," the official said. "But the problem we're faced with is, if we don't extend the deadline, we're facing a sole-source bid. We consider this competition to be very healthy."
Lehman, in a prepared statement, adamantly denied the action was designed "to protect General Dynamics."
"This is an action to protect the public interest; that is, competition and therefore lower prices in shipbuilding. It would be foolish of us to award a sole-source contract just to spite another contractor," he said.
General Dynamics, the nation's third largest defense contractor, was suspended from receiving new government contracts Tuesday, a day after the company and four of its current or former executives were indicted on fraud charges.
The allegations involve mischarging cost overruns in producing prototypes of the Army's Divad antiaircraft gun. The company has denied wrongdoing.
The suspension could last until the Divad case is resolved, but General Dynamics has 30 days to try to persuade the Navy to lift the freeze. A previous ban on new Navy contracts for General Dynamics was lifted last summer after 12 weeks.
Because of Pyatt's decision, the St. Louis-based defense giant may still have an opportunity to bid for the new submarines. General Dynamics, which received $6 billion in military contracts in 1984, has been awarded orders for three attack submarines in the last two years. Newport News has received four.
"We don't want another Trident situation," the Navy official said, referring to the fact that General Dynamics is the only source of Trident ballistic missile submarines.
" . . . There's some breathing room here for people to look at the facts and see what General Dynamics comes back with during the 30-day period," the official said.