American Notes Defense

How many defense contractors cheat the Government? Just "a few bad apples," is Defense Secretary Caspar Weinberger's reply. But last week the Pentagon's inspector general, Joseph Sherick, startled a House subcommittee by revealing that 45 of the 100 largest defense contractors are under investigation for possible illegalities relating to their military work. Sherick said he will recommend that Weinberger ban two top executives of General Dynamics, Chairman David Lewis and Chief Financial Officer Gordon MacDonald, from dealing with Pentagon contracts. The firm recently agreed to repay the Government $244 million in improperly charged expenses. Such a blackball would put heavy pressure on General Dynamics to fire the men, since 94% of the company's business comes from Pentagon projects, including the Trident submarine, the F- 16 jet fighter and the M-1 tank.

The type of crimes being probed was illustrated by federal indictments brought last week against ten aerospace-industry employees who were accused of accepting about $100,000 in kickbacks for helping other firms secure $1 million in machine-parts contracts. All but two of the defendants had worked for Hughes Aircraft Co. This week a House subcommittee will issue a report claiming that some contractors have billed the Government for executives' haircuts, company golf outings and even for 26,000 promotional tie tacks. Testified Sherick: "Anybody who quotes me as saying things are good needs their bolts tightened."