Pentagon Scandal Spurs Lawmakers to Urge Reforms

Just as the Navy’s $640 toilet-seat covers prompted a burst of legislation several years ago, the current Pentagon fraud scandal has brought renewed calls for congressional action on an old problem--reforming the multibillion-dollar defense procurement system.

Already, prominent members of Congress are dusting off old proposals and drafting new ones designed to tighten up on the procedures used by the Defense Department to purchase everything from widgets to aircraft carriers.

“I think it is clear that Congress has to get into this issue again,” said Rep. Les Aspin (D-Wis.), chairman of the House Armed Services Committee.

Yet sweeping new reform efforts, unless very carefully designed, ultimately could do more harm than good, some experts warned--raising costs and making an already cumbersome system even less responsive to the nation’s defense needs without necessarily reducing the opportunities for abuses.

And some advocates of procurement reform privately acknowledge that the new flurry of legislative proposals may be motivated more by election-year politics than by an understanding of the system and its weaknesses. Bills directed at wrongdoing in the Pentagon are seen by Democrats and Republicans alike as an opportunity to distance themselves from what they fear might be voters’ perceptions of “sleaze” in Washington as a result of such things as the allegations of impropriety leveled at Atty. Gen. Edwin Meese III and House Speaker Jim Wright (D-Tex.).

Pressure on Congress

Indeed, the current scandal hit at a time when Congress was feeling intense pressure from the defense industry to loosen up many of the reforms enacted in the wake of the procurement horror stories--such as the high-priced toilet-seat covers--that surfaced in the early 1980s during President Reagan’s military buildup. Industry officials contend that these regulations have added red tape that drives up their costs and slows their ability to deliver new weapons.

“From 1983 on, the train was running toward more and more regulations directed at the procurement process,” said Sen. Sam Nunn (D-Ga.), chairman of the Senate Armed Services Committee. “What we’ve done recently is slow the train down. But I think the train is going to start running again.”

The Justice Department’s highly publicized investigation is expected to halt industry efforts to reduce procurement requirements. And members of Congress predict that it will quickly lead to passage of new legislation designed to curb the Pentagon’s use of outside consultants and to further slow down the so-called “revolving door” that allows people to shift jobs easily between the defense industry and the Pentagon.

Many Ideas Beaten Down

Many of the legislative proposals now under consideration are ideas that have been successfully beaten down in the past by Defense Department and industry officials on grounds that they are too extreme. These include proposals to create a so-called procurement “czar,” an independent procurement agency and a series of independent investigative units around the country designed to investigate defense acquisition fraud.

Sen. Alan J. Dixon (D-Ill.), who favors a procurement czar, said the current scandal proves a dramatic change is necessary. “Further scandals involving massive cost overruns and defective equipment throughout the military inventory jeopardize our readiness and ability to sustain ourselves in wartime,” he declared.

Still, many influential members of Congress share the view of Defense Department and industry officials that additional legislation would only add to the red tape of the procurement system, increasing the cost and paralyzing the process.

Flurry of Actions

“What we had a few years ago was a flurry of legislative actions, which was not that well thought out,” said Sen. Jeff Bingaman (D-N.M.), chairman of the Armed Services subcommittee on the defense industry and technology. “I hope we can avoid that this time. I hope we would be able to avoid a knee-jerk reaction.”

Harlan K. Ullman, director of the ICF Defense Group, a Washington-based consulting firm, contends that the current acquisition system is already so bogged down by restrictions that readiness of the U.S. armed forces could be reduced by as much as 20% in the next three or four years unless this burden is lifted. “We need more effective regulation and oversight, not more regulation and oversight,” he said.

Both Nunn and Aspin, whose committees will soon conduct separate hearings on the matter, share the fears of the industry and the Defense Department that the scandal will cause an overreaction in Congress. “I’ve been through three or four procurement reform cycles, and yesterday’s solutions are usually part of today’s problems,” Nunn said.

Laws Not Enforced

Moreover, both committee chairmen believe the current scandal has occurred primarily because the Administration has failed to enforce existing laws, not because there is a need for more legislation. “Clearly, some laws are not being adequately enforced,” Aspin said. “I’d estimate that 80% of it is due to lack of enforcement, 20% due to a lack of laws.”

Nevertheless, both Nunn and Aspin said their committees would look into the role that consultants have played in the current scandal and try to close any “loopholes” that are being exploited. Aspin estimated that as many as 50 consultants--many of them former Pentagon employees--are under investigation for funneling secret Defense Department information to contractors.

In addition, the hearings will explore the question of whether improprieties and illegalities now under investigation tainted the Pentagon’s procurement process so seriously that more than 80 contracts involving tens of billions of dollars now have to be reopened.

The scandal also raises the possibility that unsuccessful bidders--convinced that they lost out because of fraud--will go to court to overturn contract awards.

Costly Legal Struggles

Such legal struggles could be costly and extremely time-consuming, further delaying the Defense Department’s acquisition of new weapons.

As they delve into the current scandal, congressional investigators say they will focus particularly on the role played by civilian and military officials who have moved between the Defense Department and consulting firms or private industry.

Under so-called “revolving door” legislation that was enacted in 1985 and expanded a year later, many Pentagon officials are barred from going to work for certain defense contractors for two years after leaving government. Although the law applies to those who go to work as consultants as well as those who accept payroll positions in the defense industry, experts note it has never been used to prosecute anyone.

“It’s like the 55-m.p.h. speed limit that is not being enforced,” said Dina Rasor, director of the Project on Military Procurement.

Enacted Too Late

Even if the law had been strictly enforced, it probably was enacted too late to prevent the current scandal. Former Assistant Navy Secretary Melvyn R. Paisley, now a defense consultant and a key figure in the FBI investigation, resigned his Pentagon job shortly before the revolving door legislation took effect on April 15, 1987.

Other critics noted that the current revolving door law also applies only to a narrow group of former Pentagon employees--those who served as government representatives in the contractor’s plant, or those who participated in a decision-making capacity in negotiations with that contractor more than half the time during their last two years in government.

Sen. Charles E. Grassley (R-Iowa), a member of the Senate Armed Services Committee and a frequent critic of the Reagan Administration’s defense policy, said the current scandal proves that the law must be broadened to apply to a larger group.

“The prevalent argument against strict revolving door legislation that was proposed two years ago and defeated now seems weak, indeed,” he said. “The argument was that strict revolving door legislation would inhibit experienced and well-qualified individuals in industry from serving in the government. But what this investigation shows is that in rejecting this strict language, we threw the baby out with the bath water.”