The revelation of significant cost overruns and schedule delays in developing the Navy's A-12 bomber has led to a federal investigation of potential criminal activity and caused some unusually public soul-searching by senior Defense Department officials.

Susan Crawford, the department's inspector general, said yesterday that a U.S. attorney for the eastern district of Missouri has begun a criminal investigation of how the two major A-12 contractors received federal payments for good work despite the program's troubles.

Her disclosure of an investigation near the St. Louis headquarters of the McDonnell Douglas and General Dynamics corporations follows the Navy's dismissal or transfer last week of two admirals and a captain charged with overseeing the $50 billion A-12 program, long considered the service's top priority aircraft and a key to future U.S. capability for attacking land-based targets from aircraft carriers.

Crawford told the House Armed Services Committee that "a criminal investigation into the overpayment" of fees to the contractors was underway with assistance from the Defense Criminal Investigative Service and the Naval Investigative Service here.

C. Paul Beach Jr., a special counsel to Navy Secretary H. Lawrence Garrett III, testified earlier that Navy payments had been made to the contractors "for several line-items . . . which were not completed at the time payment was made." He also said "deficient performance by contracting and other personnel" had led to routine payment of other fees that should have been delayed.

Beach said his inquiry indicated "there was significant pressure from corporate headquarters to maintain cash flow" on the program.

Garrett, amplifying on a scathing internal report released last week, testified that until last June, the contractors and Navy officials overseeing the program had provided "no indication" of the cost overruns, now estimated at more than $1 billion.

He said the embarrassing information was not disclosed until after Defense Secretary Richard B. Cheney had completed an extensive review that approved continued development of the "stealthy" attack aircraft. Garrett said that "to be very frank, I was stunned" by the revelations.

He subsequently ordered an audit that culminated in his recent decision to accept the retirement of Vice Adm. Richard C. Gentz, commander of the Naval Air Systems Command, and to reassign Rear Adm. John F. Calvert, an executive officer for tactical aircraft, and Capt. Lawrence S. Elberfeld, the A-12 program manager.

Garrett said in response to questions, however, that Elberfeld's scheduled promotion to rear admiral would occur despite his formal censure for "errors in judgment" -- a move criticized by Rep. Andy Ireland (R-Fla.) on grounds that it sent a mixed message to other department officials.

Garrett said the problems had not been reported because of "human errors in judgment," rather than inherent flaws in the procurement system. He acknowledged, however, that procurement officials often "find it very hard to push bad news up to the top."

Cheney told reporters Friday that he had asked Deputy Defense Secretary Donald J. Atwood to consult with Undersecretary John Betti and senior Navy officials this week on the A-12 problems. He said "obviously . . . there are significant problems" in the agency's weapons-buying procedures, which are frequently undermined by excessively optimistic forecasts of weapon performance and cost.

"Once you think that there's been a clear assessment, that you've got good information on the status of the program, all too often the dates slip, {and there are} cost overruns. It's the normal frustration that comes all too often in Defense Department programs," he said.

Cheney said the problems partly stemmed from tensions between the agency's "can-do" culture of overcoming obstacles and its need to recognize genuine problems when they occur.

"What you worry about is the institution . . . . My guess is, the day I walk out of this building, we'll still be trying to find ways to improve" the process, Cheney said.